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 projecting revenue for a performance contract that includes variable consideration, the method comprising:
providing, by a server system to one or more client devices over a communication network, one or more user interfaces for configuring a set of one or more performance obligation rules based on corresponding business operations for evaluating a performance contract that includes variable consideration;
receiving, by the server system from the one or more user interfaces, first input data specifying the set of one or more performance obligation rules, each performance obligation rule of the set of one or more performance obligation rules including one or more conditions;
obtaining, by the server system over the communication network, information associated with the performance contract, the performance contract including transaction lines associated with one or more transactions;
applying, by the server system, the set of one or more performance obligation rules to the performance contract to associate the transaction lines with a performance obligation template of one or more performance obligation templates to generate one or more corresponding performance obligations associated with one or more revenue recognition events;
receiving, by the server system, second input specifying a variable-consideration type associated with the variable consideration;
retrieving, by the server system from a database over the communication network, historical transaction data associated with the variable-consideration type;
using, by the server system, the one or more revenue recognition events and the historical transaction data associated with the variable-consideration type to project revenue for the performance contract; and
generating, by the server system, a report based on the projected revenue for the one or more performance obligations that correspond to the one or more revenue recognition events.
2. The computer-implemented method of claim 1 , further comprising:
identifying an adjustment type for the variable-consideration type;
using the one or more revenue recognition events and the historical transaction data associated with the variable-consideration type to generate a variable-consideration modifier for the variable-consideration type based on the adjustment type;
applying the variable-consideration modifier to the projected revenue.
3. The computer-implemented method of claim 2 , wherein the variable-consideration modifier is based on a percentage.
4. The computer-implemented method of claim 2 , wherein the variable-consideration modifier is based on an amount.
5. The computer-implemented method of claim 1 , further comprising:
determining actual revenue from the one or more revenue recognition events;
determining one or more corrections to the projected revenue based on the actual revenue; and
applying the one or more corrections.
6. The computer-implemented method of claim 5 , further comprising:
reallocating the transaction lines by reallocating a transaction price in the performance contract in response to the one or more corrections applied to the one or more transactions.
7. The computer-implemented method of claim 5 , further comprising:
applying the one or more corrections to individual transaction lines.
8. The computer-implemented method of claim 1 , further comprising:
assigning a fair value to each transaction of the one or more transactions; and
recognizing transactional revenue associated with the each transaction of the one or more transactions.
9. A system for projecting revenue for a performance contract that includes variable consideration, 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, by a server system to one or more client devices over a communication network, one or more user interfaces for configuring a set of one or more performance obligation rules based on corresponding business operations for evaluating a performance contract that includes variable consideration;
receiving, by the server system from the one or more user interfaces, first input data specifying the set of one or more performance obligation rules, each performance obligation rule of the set of one or more performance obligation rules including one or more conditions;
obtaining, by the server system over the communication network, information associated with the performance contract, the performance contract including transaction lines associated with one or more transactions;
applying, by the server system, the set of one or more performance obligation rules to the performance contract to associate the transaction lines with a performance obligation template of one or more performance obligation templates to generate one or more corresponding performance obligations associated with one or more revenue recognition events;
receiving, by the server system, second input specifying a variable-consideration type associated with the variable consideration;
retrieving, by the server system from a database over the communication network, historical transaction data associated with the variable-consideration type;
using, by the server system, the one or more revenue recognition events and the historical transaction data associated with the variable-consideration type to project revenue for the performance contract; and
generating, by the server system, a report based on the projected revenue for the one or more performance obligations that correspond to the one or more revenue recognition events.
10. The system of claim 9 , wherein the computer-executable instructions further cause the at least one processor to perform:
identifying an adjustment type for the variable-consideration type;
using the one or more revenue recognition events and the historical transaction data associated with the variable-consideration type to generate a variable-consideration modifier for the variable-consideration type based on the adjustment type;
applying the variable-consideration modifier to the projected revenue.
11. The system of claim 10 , wherein the variable-consideration modifier is based on a percentage.
12. The system of claim 10 , wherein the variable-consideration modifier is based on an amount.
13. The system of claim 9 , wherein the computer-executable instructions further cause the at least one processor to perform:
determining actual revenue from the one or more revenue recognition events;
determining one or more corrections to the projected revenue based on the actual revenue; and
applying the one or more corrections.
14. The system of claim 13 , wherein the computer-executable instructions further cause the at least one processor to perform:
reallocating the transaction lines by reallocating a transaction price in the performance contract in response to the one or more corrections applied to the one or more transactions.
15. The system of claim 9 , wherein the computer-executable instructions further cause the at least one processor to perform:
applying the one or more corrections to individual transaction lines.
16. The system of claim 9 , wherein the computer-executable instructions further cause the at least one processor to perform:
assigning a fair value to each transaction of the one or more transactions; and
recognizing transactional revenue associated with the each transaction of the one or more transactions.