Revenue Recognition for Periodic Service Billing

[Jiaqi]

Hi Experts,

Would like to know what is the logic for periodic service billing if the period defined in the billing plan starts from mid-month?

In example screenshot below, the recognized revenue for each month is $100 if the periodic service start date is exactly 1 Jan 2023 and end date is 31 Dec 2024.

If the period service billing start date is 15 Jan 2023 and ends on 14 Jan 2024, then what will be the recognized revenue from Jan 2023 to Jan 2024?

Does periodic service billing revenue recognition take into account the start and end date of the period? If the calculation does not consider the start and end date, would it not over-recognize the revenue on the first and last month and under-recognize the revenue for the months in between?

Thanks,

Jiaqi

[JulianoRomanato]

Hello jiaqi.

How are you? I have excluded the Tag "SAP S/4HANA Cloud" and included the Tag "SAP S/4HANA Cloud for Finance" for this question, as Revenue Recognition is related to Finance Line of Business.

Regards.

Juliano Romanato.

[Mark_W]

We helped you to accept the answer, since there were no updates after 7 days.

You can unaccept it anytime if you have further questions.

[OwenLiu · Accepted solution]

Hi Jiaqi,

Normally the revenue recognition will go align with the date.

There will not be extra revenue recognized.

Is this different with your testing result?

Best Regards,
Owen

[Jiaqi · Accepted solution]

Hi owen.liu ,

Thank you so much for your reply!

Based on my testing, the system currently distributes the total revenue amount evenly across the months without considering how many days are left in the first and last month. For example, if the period service billing start date is 15 Jan 2023 and ends on 14 Jan 2024 with total revenue $12000, the revenue recognized at each month is $12000/13 = $923.08 instead of $500 on Jan 2023, $1000 on 11 subsequent months and $500 on Jan 2024. The current calculation done by the system seems to be over-recognizing revenue on the first and last month; and under-recognizing the revenue for all the months in between. Could you please clarify if this the expected behaviour?

Thanks,

Jiaqi

[OwenLiu · Accepted solution]

Hi Jiaqi,

Could you please test with key CCSA, instead of CCS?

Best Regards,
Owen

[Jiaqi · Accepted solution]

Hi owen.liu ,

The revenue recognition key SPPC, not CCS. This is a professional services scenario.

Thanks,

Jiaqi

[OwenLiu · Accepted solution]

For customer project, there is no available function to achieve the requirement.

Suggest you to raise feature request.