Revenue Recognition Wizard

This screen is reached by right clicking on any project on the project browser and choosing Perform Revenue Recognition. Despite the fact that this screen is reached from the project browser, revenue recognition is calculated at the contract line item level, not at the project level. The screen you are presented depends on whether you are recognizing revenue using the percent complete vs. revenue schedule method.

Permissions and Settings

To perform revenue recognition you must have the cost center permission Revenue Recognition for the engagement's cost center.

Your Percent Complete method is determined by the system setting Base Percent Complete On. Your choices are Person Hours, Resource Direct Cost, or Contract Revenue. If you have chosen the RDC method, then your users who run revenue recognition will likely want to have the global permission Resource Direct Cost (RDC) Data. Otherwise they won't be able have Projector calculate percent completely automatically for them. The reason for this limitation is because through some clever math you could back calculate RDC rates based on revenue recognition numbers. If you are not sure what percent complete is, see our revenue recognition how-to.

Revenue recognition should almost always be run on FP engagements. Revenue recognition should almost never be run on T&M or NTE engagements.

On Fixed Price engagements you can optionally specify a Holdback amount. This amount is set aside until the client has signed off on the contract. When performing revenue recognition, Projector subtracts the holdback from the contract amount when calculating values like percent complete. In order to recognize the the held back amount, zero it out on the contract tab and then make a final revenue recognition run.

Revenue recognition is only run for time cards, not for cost cards. However, you can now run Rev Rec for projects with zero hours. 

The revenue recognition dialog you are displayed depends on whether you have chosen Percent Complete or Revenue Schedule on the Engagement Contract Tab.

Once a time card has been through revenue recognition, you typically cannot transfer it to another project or unapprove it. This is because that time card now has earned revenue associated with it. If you remove the time card, that revenue needs to go somewhere. In these cases you should probably undo revenue recognition, transfer/unapprove the time, and then redo revenue recognition. Step-by-step instructions for this process are available in our Reversing Revenue Recognition tutorial. Notice that I said typically you cannot transfer/unapprove, however, there is a system setting called Allow transfer/unapprove of fixed price time cards that have been through revenue recognition that bypasses this limitation. You should only use this feature if you know what you are doing. Some cases where it would be okay to transfer/unapprove time cards that have been through revenue recognition are:

• The transferred time card had zero revenue to begin with
• You know that you are going to rerun revenue recognition and correct the time cards

You can perform revenue recognition regardless of whether your accounting periods are open or closed, but where your revenue lands after the revenue recognition process does depend on whether the accounting periods are open.

If the time period that you recognized revenue on is still open for time cards, then any time cards approved after your rev rec run will have zero revenue on them. You will need to either rerun revenue recognition to get revenue properly allocated to them, let them sit as zero, or you should close the period or project for time entry to prevent further hours from being added.

Revenue Recognition Wizard

To launch the revenue recognition wizard, go to your projects tab. This next part is a little confusing. Revenue recognition is always run at the engagement level, but it is launched from the project browser. So find the project whose engagement you want to rev rec. Right click that project and choose Perform Revenue Recognition. Depending on whether you have chosen to use  Percent Complete or a Revenue Schedule on the Engagement Contract Tab, you'll be presented with one of two dialogs. See the appropriate subsection below depending on what your choice was.

Percent Complete

At it's core, the percent complete recognition process is pretty simple. You choose a start date, an end date, and how much revenue you want to recognize between those two dates. Projector finds all time cards between the dates, divvies up the revenue to each time card according to your Percent Complete method (Hours, RDC, or CR), and you are done. If you have run revenue recognition previously on your selected date range, then all time cards before the start date are left alone. All time cards after the end date are zeroed. 

Date Range

The upper half of the dialog is where you pick the date range you want Projector to recognize revenue on. The layout is a little confusing because you specify the end date first (Use Actuals Through). Then you specify the begin date (From).

Revenue Amount

The lower half of the dialog is where you specify how much revenue should be allocated across the given time cards. You have four options. The first is an automatic calculation done by Projector. The remaining three are manual override amounts. Each is explained in the table below.

Once you have confirmed the information, click Next again and then see the Confirmation Screen section of this document.

Reversing Revenue Recognition

To reverse revenue recognition after a specific date, set the date range to the period preceding that date. For example, to reverse revenue recognition performed on and after October 1, set the date range to September 1 through September 30. Next, specify the amount of revenue to be recognized for that date range. Most likely, you will be specifying the amount of revenue that had previously been recognized for that preceding period. Projector will re-recognize the revenue for that preceding period (September 1 through 30 in our example). Here is where the reversing happens: the revenue previously recognized on and after the specified date (October 1 in our example) will be reversed.

This reversing action is a subtlety of revenue recognition. Any time you recognized revenue through a date, any revenue created after that date by running the revenue recognition wizard will be reversed. Note that in the very unlikely case that you use the wizard on a T&M or NTE engagement (this is generally not recommended!), what is reversed is the revenue recognized by the wizard, not revenue recognized automatically as time is approved.

Revenue Schedule

If you have chosen to use a revenue schedule, then the wizard is really very straightforward. You are displayed a grid of your revenue schedule that shows all your previously recognized revenue. By default, the next time period for revenue recognition is automatically checked. If you want you can roll back revenue recognition to a previous time period, but you cannot skip a period and recognize something in the future.

To rollback and start over, tick the Undo all revenue recognition checkbox. 

When you click Next you'll be shown a read-only display of how much revenue Projector plans to recognize and the date ranges it will use. Once you have confirmed the information, click Next again and then see the Confirmation Screen section of this document.

Confirmation Screen

Whether you recognize revenue using a schedule or percent complete, you are always shown the following confirmation screen prior to completing revenue recognition. After you have reviewed the proposed adjustments and warnings, click OK to finalize the revenue recognition. A PDF will be automatically created and opened, showing a summary of your actions. See the Summary PDF section of this page for more information.

Summary

The summary section shows all the information Projector gathered for this revenue recognition run and how it was used to adjust your recognized revenue. The data points are displayed in three separate columns. The first column shows all your actuals to date. The second column shows all your estimates based on booked hours. The final column shows the sum of the first two.

Warnings

You may see the following warnings. Some of these warnings will prevent you from completing your revenue recognition run. Others are merely to notify you that something may need your attention prior to completion of your revenue recognition run.

Notes

The notes area is exactly that, a place where you can store information about this revenue recognition run and why you made the choices you did. You can review these notes on your confirmation PDF, discussed next.

Revenue Recognition Confirmation PDF

Each time you run revenue recognition the details of the run are stored in a PDF file. At any time you can view this detailed PDF from the history browser (see the history browser docs below). 

Revenue Recognition History

You can view past revenue recognition actions by clicking the Show History button. The following form is shown. An explanation of each column is shown in the table below.