Usage-based products create Agreement Fee Schedules. For usage-based products, use Ratable or Ratable-Day as the Revenue Recognition policy.

Split Revenue Recognition Policy is not supported for Usage Based Products.


To recognize revenue for a usage-based product, 

  1. Create an order with a usage-based product. The product which is now an activated asset will have a Usage and a Billing Schedule generated automatically. 

  2. Activate the order.

  3. Enter Usage Input to record the quantity consumed over a period.

  4. Rate the Usage Input.This quantity is reflected in the Usage Schedules for the effective period.
  5. The rated amount derived from the Usage Input is reflected in the Billing Schedules for the effective period.

  6. Enter Revenue Recognition Date. 

  7. Agreement and Agreement Fee schedules are created. 

Use Case: Revenue Recognition for Usage Based Product

Description: This use case describes how revenue agreement fee scheules are created for usage-based products

Suppose your customer is billed according to the flat rate defined for each fix quantity for a usage product 'StarKit'. A flat rate is defined for quantity as per the following:

  • 10 units = $120
  • 20 units = $150
  • 30 units= $275
  • 40 units = $500

Prerequisite: 

Starkit Product Configuration: 

  • Price Matrix
    • 10 units = $120
    • 20 units = $150
    • 30 units= $275
    • 40 units = $500

  • Revenue Recognition Policy: Immediate

Steps:

  1. Accept a Quote containing the products with Start date as 1/Jan/2018 and End date as 31/December/2018.
  2. Once the order is created, enter the order activation date. Billing Schedules and Usage Schedules are created. 
  3. Create Usage Inputs as follows:
    1. Quantity: 10
    2. Quantity: 20
  4.  Process the Usage Inputs to see rated amount as $120 and $150 respectively.
  5. Invoice the billing schedules associated with the Usage Schedules. 

Result:

  • Agreement Fee Schedules are created for each corresponding Usage Schedules. 
  • Agreement Fee is equal to $270.

Revenue Recognition for Usage Input Modifications

When a rated usage input is modified, the related agreement fee scheules are updated to reflect the latest adjustments. 

Terminating a Usage Based Asset

Revenue Recognition stops when you terminate a usage-based asset. Agreement Fee schedules and Agreement Fee are not updated for a terminated usage asset.