Revenue Recognition (RR) is simplified with fields designed to make it easy to schedule recognition for dues, membership applications, meetings, classes, and subscriptions. This article will provide an overview of the process and the records related to it.
About Revenue Recognition Records
Revenue Recognition records are generated when an Invoice is paid.
To find them, start from the Invoice and click for Related records. Select Revenue Recognition. The number of records will depend on how many different product GL Accounts there are, and the recognition schedule.
All RR Products need both a WIP and a Revenue Product GL Account
If you start from the Product record: the only field to complete is the GL Account. The Product and the Type fields will populate by default.
You can create unique WIP and Revenue GL Accounts for this purpose, or just use the defaults.
For membership: it is possible to have multiple products on an order. Those products can have different WIP and Revenue Product GL Accounts for Revenue Recognition.
RECOGNITION FOR MEETINGS AND CLASSES
On Class and Meeting records there is a field where the date for Revenue Recognition can be set.
If a date is set on this field and the Product GL Accounts are set up correctly, then a Revenue Recognition Record will be created. If no date is set on this field, then there will be no Revenue Recognition record even if the product GL Accounts are set up with a WIP and Revenue record.
RECOGNITION FOR DUES AND MEMBERSHIP APPLICATIONS
Dues can be set to recognize revenue Monthly, Quarterly, or not at all. You can also specify if someone is paying later as part of a Membership Application, if the Revenue will be recognized upfront, or if the amount will be split across the remaining months.
- For membership applications, you can set a one time membership application fee product. If that product is set up with a WIP and Revenue Product GL account and you have a linked dues option with Revenue Recognition specified then the one time product will also be recognized along the same guidelines as the dues products.
- If you do not wish to delay recognition of the application fee or any other products, make sure that there is no WIP Product GL account set up.
- If you only charge an application fee and no dues, then no Revenue Recognition record will be automatically generated even if you have both the WIP and Revenue accounts set up for the product.
If the fields in the screenshot are not set on the dues cycle, then no Revenue Recognition records will be created. For specific details on this part of dues set up click here.
COMPLETING REVENUE RECOGNITION RECORDS
A cron job runs daily to look for Revenue Recognition with the current date set and will complete the records it finds. Completing Revenue Recognition records means that the GL entries will be created to:
- Debit from the WIP Account
- Credit the Revenue Account
The Revenue Recognition record will then be deactivated. If there is only one record then the process is complete. If you have multiple records, then the process will continue on the dates set on other records. If you need to recognize revenue ahead of the established date, this can be done by changing the date on the Revenue Recognition record to a day prior to the current date. That will prompt the record to deactivate and generate the correct GL entries.
The record below has not yet been recognized.
The record below has been recognized.