Use the Revenue Policy page to specify your enterprise revenue policies. The Revenue Management Engine uses the information that you enter in this page to make automatic revenue recognition decisions for your manually entered and imported invoices. The Revenue Management Engine compares each invoice against the revenue policy information that you state here. Any deviations cause the assignment of revenue contingencies to the invoice or invoice line, which impact the timing of revenue recognition for those invoices.

Note: Even if you do not specify anything in this page, Receivables can still automatically defer or recognize revenue for your invoices. If one or more revenue contingencies exist on a billing line, then Receivables enables collectibility analysis for that line, and bases revenue decisions on the contingency.

Defining Your Revenue Policy

Responsibility: Revenue Management Super User
Navigation: Revenue Policy > Revenue Policy

The setup defined at the operating unit level. You can think of the setup at the Revenue Policy form as the default Revenue Contingency to apply to all invoices. It is the general policy that will be used to evaluate all invoices for all customers without exceptions.

Use the Revenue Policy page to enter information about:

The credit classifications that identify your high risk, noncreditworthy customers.
If you enter or import an invoice for a customer that is associated with one of these credit classifications, then:

• Receivables assigns the Customer Creditworthiness contingency on the invoice.
• The Revenue Management Engine immediately defers revenue on the entire invoice.

Receivables recognizes revenue for this invoice only to the extent of payments received.

The standard refund period that you typically offer to your customers.
When you enter or import an invoice with a line that is associated with a contract, the Revenue Management Engine analyzes the contract details. If the contract offers a refund period that exceeds the refund period specified here, then:

• Receivables assigns the Refund contingency on the invoice line.
• The Revenue Management Engine automatically defers revenue on that invoice line.

Receivables recognizes this line's revenue only after the refund policy period expires.

The maximum time period before a payment term becomes extended.
If you enter or import an invoice with a payment term or installment schedule that exceeds the threshold specified here, then:

• Receivables assigns the Extended Payment Term contingency on the invoice.
• The Revenue Management Engine automatically defers revenue on the entire invoice.

For example, you enter a maximum payment term threshold of 180 days, and you later enter or import an invoice with a payment term that has four installments (Net 60, Net 90, Net 120, and Net 200). Receivables defers the entire revenue amount on the invoice because the last installment exceeds the 180-day threshold by 20 days. Receivables recognizes revenue for this invoice only to the extent of payments received.