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Revenue Recognition in NetSuite is a powerful feature that helps businesses comply with accounting standards such as ASC 606 (IFRS 15) for revenue recognition. It ensures that revenue is recognized accurately based on performance obligations, timing, and delivery of goods or services, rather than simply when payments are received.
Automated Revenue Recognition:
Automatically recognizes revenue based on predefined rules and schedules.
Aligns with standards like ASC 606 and IFRS 15.
Revenue Allocation:
Allocates revenue across multiple performance obligations or deliverables.
Uses fair value pricing for allocation in bundled contracts.
Flexible Revenue Rules:
Supports custom revenue recognition schedules (e.g., daily, monthly, or milestone-based).
Allows percentage-of-completion or straight-line recognition.
Multi-Element Arrangements (MEAs):
Handles complex contracts with multiple deliverables or bundled products and services.
Allocates revenue to individual components based on fair value.
Deferred Revenue Management:
Tracks deferred revenue in balance sheets and releases it over time as obligations are met.
Automatically creates journal entries for deferred and recognized revenue.
Integration with Order-to-Cash Processes:
Tightly integrates with sales orders, contracts, and billing systems to ensure seamless revenue management.
Real-Time Reporting:
Provides real-time visibility into deferred revenue, recognized revenue, and forecasts.
Includes standard and custom reports for compliance and management insights.
Multi-Currency and Multi-Subsidiary Support:
Supports revenue recognition in multiple currencies and across subsidiaries.
Consolidates financials for global operations.
Compliance with Standards:
Ensures adherence to ASC 606, IFRS 15, and other global revenue recognition regulations.
Automation:
Reduces manual errors and saves time by automating revenue recognition processes.
Improved Financial Accuracy:
Accurately tracks and reports revenue, deferred revenue, and obligations.
Streamlined Processes:
Integrates seamlessly with other NetSuite modules like CRM, ERP, and billing for end-to-end revenue management.
Customizable and Scalable:
Adapts to the unique needs of businesses in various industries, such as SaaS, manufacturing, and professional services.
Enable Revenue Recognition Features:
Go to Setup > Company > Enable Features > Accounting and enable relevant revenue recognition features.
Set Up Revenue Recognition Templates:
Navigate to Lists > Accounting > Revenue Recognition Templates to define schedules and rules (e.g., percentage of completion, fixed schedules).
Define Fair Value Pricing:
Use Advanced Revenue Management (ARM) to assign fair value to items or components in bundled contracts.
Create Revenue Recognition Schedules:
Attach schedules to items, sales orders, or contracts for automatic application.
Link Revenue to Performance Obligations:
Use ARM to tie revenue recognition to the completion of performance obligations.
Run Revenue Recognition Processes:
Use Revenue Recognition > Manage Revenue Recognition to generate journal entries for recognized revenue.
Monitor and Report:
Use standard reports like Deferred Revenue Waterfall and custom dashboards to track revenue recognition status.
Subscription Services:
Recognize revenue monthly for SaaS or other subscription-based models.
Long-Term Contracts:
Use percentage-of-completion methods for construction or project-based services.
Product Bundles:
Allocate revenue across hardware and software in bundled sales.
Deferred Revenue:
Manage upfront payments by recognizing revenue over the contract period.
Deferred Revenue Waterfall:
Displays how deferred revenue will be recognized over time.
Revenue by Item Report:
Shows revenue recognition status for each product or service.
Forecasted Revenue Reports:
Provides insights into future revenue streams based on current contracts.