Below is a full transcription of the video above:
“So once a revenue agreement is created, then you’re going into ongoing management process of a revenue document. Most of the time you wouldn’t edit a revenue agreement after it’s created. That would generally an anomaly. This may happen when there’s a contract modification after the sale. Let’s say you amend the contract three or four months later. But all along you were kind of negotiating with the customer throughout the entire sale process.
After the initial contract you were negotiating some sort of an amendment. So essentially that amendment is considered part of the original contract, in which case you would modify that revenue agreement to reflect the fully amended values and reallocate the amounts if necessary. In that scenario, you’re changing the total value of the contract. Otherwise, you may be making smaller changes like the start dates or end dates, time periods or the method of allocation, the revenue rule over what time period it’s allocated.
Those kinds of changes can happen throughout the life of the contract. There are certain kinds of modifications, either the value in total or the revenue recognition pattern might change. Beyond that, the revenue management is recognizing the revenue each month or whatever time period maybe it’s weekly or monthly. You would recognize each open revenue agreement that has a deferred revenue balance.
For straight line, you would pick the end of the month and then either for all revenue rule types or a subset and compute and post them. Once you’ve posted them, you can run a report. You can analyze the change over a certain time, or we can look at revenue details over a time period or deferred revenue balances.
This one shows a roll forward of what new agreements were created and what revenue was booked. So, you can roll forward the deferred liability from month to month. So that’s part of the revenue management, the monthly revenue recognition analysis, creating journal entries, etc.”
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