Armanino Blog

Contract Administration - Revenue Recognition

January 28, 2009

Contract Administration is included in the Dynamics GP, BRL - Advanced Management license. We have clients that are using it a lot to manage revenue recognition for parts of their businesses. The key functionality that makes it good for certain revenue recognition applications is that if you invoice your customers less than monthly, the module has a built-in deferred revenue recognition process that will create and post monthly revenue recognition entries.

It's relatively easy to use.

You create a new contract by navigating to: Transactions >> Contract Administration >> Contract Entry/Update.

In this example, I am invoicing annually.

Contract Entry/Update>

Click on the "Contract Lines" button and this screen pops up. In this screen you can either select items from the item master file, or just key in an item. The pricing can be set up to default from a separate price book if you wish, or you can merely key in the amount you want to charge.

Contract Maintenance Lines>

Click on the "Invoices" button and you get a list of all the invoices that are planned to be created according to the schedule you've set up. In this case there is only one, because this is a one year contract, invoiced on an annual basis. This screen will just show the amount to be invoiced for the selected line item in the schedule above.

Contract Line Invoice Records>

In this screen you see the revenue recognition transactions; posted, and planned. The top window shows all the revenue recognition transactions that are scheduled to be posted. The bottom window shows the transactions that have been posted.

Revenue Summary>

To invoice the contract, navigate to: Transactions >> Contract Administration >> Contract Billing.

To generate and post the revenue recognition transactions, navigate to: Transactions >> Contract Administration >> Revenue Recognition

One of the advantages of this module for revenue recognition is that the schedule of planned and posted revenue transaction are contained in SQL tables; as opposed to Project Accounting that calculates and creates the transactions as you request them. This makes reporting on future revenue easier.

Generally we recommend one or more of three modules in Dynamics GP to manage revenue recognition: Contract Administration, Project Accounting, and Revenue / Expense Deferral.

Each has its strong points. It depends on the business process you want to control, as to which module you choose.

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