System and method for recognizing revenue and managing revenue lifecycles
A system and method for calculating variable consideration for performance obligations. The method can involve, checking a database for historical transaction data, accessing the historical transaction data, and applying one or more predetermined variable consideration rules to the historical transaction data. The method can include automatically analyzing the historical transaction data generating an analysis report based on the data. The method can include uploading predetermined corrections to variable consideration transactions to a database or other storage medium and applying the corrections to historical performance obligation transaction data. The method can include determining whether variable consideration changes should be applied to individual transaction lines within the variable consideration transactions.
1. A computer-implemented method of calculating likely revenue based on variable consideration for one or more performance obligations of a performance contract, the method comprising:
providing a user interface configured to enable a plurality of users to configure different performance obligation rules based on a plurality of different business operations, the providing the user interface including enabling a particular user to configure particular performance obligation rules based on particular business operations;
receiving, at a server system from a client device associated with the particular user over a communication network, information regarding a performance contract, the performance contract including one or more individual transactions and including one or more performance obligations that correspond to one or more revenue recognition events;
identifying, by the server system, the one or more individual transactions in the performance contract;
identifying, by the server system, the one or more performance obligations that correspond with the one or more revenue recognition events;
using, by the server system, the particular performance obligation rules to assign each of the one or more individual transactions to one of the one or more performance obligations;
associating, by the server system, at least one performance obligation of the one or more performance obligations with a variable-consideration type;
retrieving, by the server system from a database over the communication network, particular historical transaction data associated with the variable-consideration type;
using, by the server system, the particular historical transaction data to project revenue from the one or more revenue recognition events that correspond to the at least one performance obligation with the variable-consideration type;
identifying, by the server system, an adjustment type for the variable-consideration type based on the particular performance obligation rules;
using, by the server system, the particular historical transaction data to generate a variable-consideration modifier for the variable-consideration type based on the adjustment type;
applying, by the server system, the variable-consideration modifier to the projected revenue to generate likely revenue for the one or more revenue recognition events that correspond to the at least one performance obligation; and
generating, by the server system, an analysis report based on the likely revenue.
2. The computer-implemented method of claim 1 , wherein the variable-consideration modifier is based on a percentage.
3. The computer-implemented method of claim 1 , wherein the variable-consideration modifier is based on an amount.
4. The computer-implemented method of claim 1 , further comprising:
determining actual revenue from at least one performance obligation;
generating one or more corrections to the likely revenue based on the actual revenue; and
applying the one or more corrections.
5. The computer-implemented method of claim 4 , further comprising:
applying the one or more corrections to individual transaction lines.
6. The computer-implemented method of claim 1 , further comprising:
determining one or more transaction costs associated with a particular individual transaction of the one or more individual transactions;
assigning a fair value to the particular individual transaction; and
recognizing transactional revenue associated with the particular individual transaction.
7. A system for calculating likely revenue based on variable consideration for one or more performance obligations of a performance contract, the system comprising:
at least one processor in signal communication with a database;
memory in signal communication with the at least one processor, the memory storing computer-executable instructions, which, upon execution by the at least one processor, cause the at least one processor to:
providing a user interface configured to enable a plurality of users to configure different performance obligation rules based on a plurality of different business operations, the providing the user interface including enabling a particular user to configure particular performance obligation rules based on particular business operations;
receive, from a client device associated with the particular user over a communication network, information regarding a performance contract, the performance contract including one or more individual transactions and including one or more performance obligations that correspond to one or more revenue recognition events;
identify the one or more individual transactions in the performance contract;
identify the one or more performance obligations that correspond with the one or more revenue recognition events;
use the particular performance obligation rules to assign each of the one or more individual transactions to one of the one or more performance obligations;
associate at least one performance obligation of the one or more performance obligations with a variable-consideration type;
retrieve, from a database over the communication network, particular historical transaction data associated with the variable-consideration type;
use the particular historical transaction data to project revenue from the one or more revenue recognition events that correspond to the at least one performance obligation with the variable-consideration type;
identify an adjustment type for the variable-consideration type based on the particular performance obligation rules;
use the particular historical transaction data to generate a variable-consideration modifier for the variable-consideration type;
apply the variable-consideration modifier to the projected revenue to generate likely revenue for the one or more revenue recognition events that correspond to the at least one performance obligation; and
generate an analysis report based on the likely revenue.
8. The system of claim 7 , wherein the variable-consideration modifier is based on a percentage.
9. The system claim 7 , wherein the variable-consideration modifier is based on an amount.
10. The system of claim 7 , wherein the computer-executable instructions further cause the at least one processor to:
determine actual revenue from at least one particular performance obligation;
generate one or more corrections to the likely revenue based on the actual revenue; and
apply the one or more corrections.
11. The system of claim 10 , wherein the computer-executable instructions further cause the at least one processor to:
apply the one or more corrections to individual transaction lines.
12. The system of claim 7 , wherein the computer-executable instructions further cause the at least one processor to:
determine one or more transaction costs associated with a particular individual transaction of the one or more individual transactions;
assign a fair value to the particular individual transaction; and
recognize transactional revenue associated with the particular individual transaction.