Invoices with Rules
Use accounting rules to determine revenue recognition schedules for your invoice lines. You can assign a different accounting rule to each invoice line. Accounting rules let you specify the number of periods and the percentage of the total revenue to recognize in each period. You can also specify whether the accounting rules are of Fixed or Variable Duration. Accounting rules of Fixed Duration span a predefined number of periods. Accouning rules of Variable Duration let you define the number of periods during invoice entry.
Use invoicing rules to determine when to recognize your receivable for invoices that span more than one accounting period. You can only assign one invoicing rule to an invoice. Receivables provides the following invoicing rules:
- Bill In Advance: Use this rule to recognize your receivable immediately (see Figure 1 – 19 below).
- Bill In Arrears: Use this rule if you want to record the receivable at the end of the revenue recognition schedule (see Figure 1 – 20 below).
Attention: With Cash Basis Accounting, you only recognize revenue when payment is received. Invoices with rules are therefore not applicable for this method of accounting, as they are designed to distribute revenue over several periods before receipt of payment. If you import invoices into a cash basis accounting system, lines with associated invoicing and accounting rules will be rejected by AutoInvoice.
Account sets are templates used to create revenue and offset accounting distributions for individual invoice lines with accounting rules. These account sets enable you to split revenue for a line over one or more revenue or offset accounts. You can change account sets from period to period to meet your business requirements. For example, you have an invoice with revenue that you want to recognize over a twelve month period, and the cost center of one of the accounts changes during the twelve months. You can update the account sets to the new cost center account for all of the revenue distributions still to be created. AutoAccounting creates the initial revenue and offset account sets for your invoice.
The Revenue Recognition program identifies all transactions with rules within a given period or range of GL dates and creates the revenue distributions for those transactions. The distributions are created for the current period only, using the rules associated with the transactions.