This is the last part of the tutorial on Setting Up Advanced Revenue Management in NetSuite. Here, you will learn about the various preferences and selections in ARM.

This will cover the following main sections:

I suggest you watch the video. It’s easier to understand if you are a visual/audio learner. The content below is the same as the video. It’s for those who learn by reading.

 

Setting Up Revenue Recognition Accounting Preferences

  • Step 1: Go to Setup → Accounting → Accounting Preferences.
  • Step 2: Click the General subtab and go to the Revenue Recognition group of the preferences.
revenue recognition
Go to pay bills page and then search the vendor that you are going to pay
  • Step 3: Go to Items/Transactions subtab, to set your Default Deferred Revenue Account preference.
  • Step 4: Click Save.
default deferred revenue account
Set your Default Deferred Revenue Account preference

 

Accounting Preferences Available

The following accounting preferences are available with the Advanced Revenue Management feature. If you are using other revenue and expense recognition features, other accounting preferences may be available.

Revenue journals in GL
Create Revenue Recognition in GL
  • Create Revenue Recognition Journals in GL– Provides a choice for posting revenue recognition and reclassification journal entries:
     
    Selections available for this are as follows:

    • Detail
    • Summary
  • Default Deferred Revenue Reclassification Account – Arrangement-level and group-level unbilled receivable adjustments require a deferred revenue account for reclassification purposes. Select a default account when the Unbilled Receivable Adjustment Journal Grouping preference is set to Arrangement or Sub Arrangement Group to avoid errors in the month-end reclassification.
  • Unbilled Receivable Adjustment Journal Grouping – Select the grouping for reclassification of unbilled receivables. This accounting preference is book specific. When multi-book accounting is enabled, it appears on the accounting book record instead of the Accounting Preferences page.
     
    The options are as follows:

    • Element
    • Arrangement
    • Sub-Arrangement Group
Unbilled Receivable adjustment journal grouping
Select the grouping from Unbilled Receivable adjustment journal grouping options
  • Use Sales Price as Fair Value – When this box is checked, if a matching record is not found in the fair value price list, the allocation uses the sales price as the fair value. When the sales price is used as the fair value, the value of Is VSOE defaults to Yes in the revenue element.
     

    If the box is not checked, you receive an error message and must either define the fair value for the item or check the box for this preference.

  • Revenue Arrangement Update Frequency or Revenue Plan Update Frequency – Allows you to select how revenue arrangements are synchronized with sales transactions and how revenue recognition plans are synchronized with revenue arrangements
     
    There are two ways to set your preferences when manual option is selected:

    • Step 1A: Go to Financial → Other Transactions → Update Revenue Arrangements and Revenue Recognition Plans.
    • Step 1B: For administrator role, go to Transactions → Financial → Update Revenue Arrangements and Revenue Recognition Plans.
    • Step 2:For Revenue Arrangement Update Frequency, click Update Revenue Arrangements to update revenue arrangements.
    • Step 2: For Revenue Plan Update Frequency, click Update Revenue Plans to update multiple revenue recognition plans.

     
    If automatic option is selected, the system updates revenue arrangements every 3 hours.

Revenue arrangements and revenue plans
Update Revenue Arrangements and Revenue Plans
  • Default Standard Revenue Recognition Rule – Select the revenue recognition rule to use by default for items.
Default standard revenue recognition rule
On Default Standard Revenue Recognition Rule, Select the default standard
  • Default Catch Up Period – Select the catch up period to use by default when an actual revenue plan that has been on hold resumes. When the hold is removed, this is the value that appears in the Catch Up Period field. You can change the value by editing the plan.

    Default options are as follows:

    • Blank
    • Current Period
    • First Open Period
  • Enable Contingent Revenue Handling – When enabled, fields are added to item records and revenue elements for contingent revenue. This is a book-level preference. When Multi-Book Accounting is enabled, this preference appears on the accounting book record, not on the Accounting Preferences page.
contingent revenue handling
Enable Contingent Revenue Handling
  • Number of Short-Term Revenue Periods – As shown in the above image, you need to enter integers from 0 to 52; the default is 12. It indicates the short-term revenue periods to include in the Deferred Revenue Waterfall report.
  • Enable Fair Value Range Checking – This preference is checked by When enabled, the Fair Value Range Checking Policy dropdown list and its dependent fields are added to the fair value price record. The Fair Value Range Checking Policy is also added to the item revenue category record.
  • Default Revenue Arrangement Form – Select the system form to use for revenue arrangements.
     
    Options here are as follows:

    • Standard Revenue Arrangement
    • Any custom forms created during implementation
  • Default Revenue Recognition Journal Entry Form – Select the journal entry form to use for revenue recognition journal entries.
     
    Options here are as follows:

    • Standard Journal Entry
    • Any custom journal entry forms created during implementation
  • Default Reclassification Journal Entry Form – Select the journal entry form to use for deferred revenue reclassification journal entries. The options here are the same as the previous preference.
  • Create and Maintain Revenue Element upon Closed Order – This preference is checked by default. When you close a sales order or a line on an order after the revenue element has been created, NetSuite does not update the revenue element. You must create a journal entry to correct the deferred revenue.
     
    Clear this preference to enable the system to update the revenue element, thus, all amounts will be updated.
revenue element check box
Create and maintain revenue element upon closed order
  • Enable Advanced Cost Amortization – Check this box to enable the accrual and amortization of eligible sales costs associated with the contract.
     
    When this preference is enabled:

    • You record eligible sales costs on the revenue arrangement and revenue element. Amortization of these costs is tracked on the revenue recognition plan
    • You must select a Contract Acquisition Expense Account and a Contract Acquisition Deferred Expense Account.
  • Default Deferred Revenue Account –Select the deferred revenue account to use by default for sales transactions. This account appears by default on item records. The default option is the system-generated Deferred Revenue account.
     
    This preference can be found in the Items/Transactions subtab as shown in Figure 2 at the beginning of this blog.

 
Summary
You just learned how to navigate to NetSuite’s Accounting Preferences page and the 17 types of preferences that you can set to completely set up ARM.

Go back to these sections by clicking below.

You can also visit Parts 1 to 3 of this blog series.

 

watch video in youtube

 

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