Revenue Recognition in projects

[Former Member]

I have the following requirement:

1 Scenario is MTO.

2 Once the order is complete, the stock is shipped to the customer site. At this point no COGS should be recognised and it should remain a stock.

3 Once the stock is shipped to the customer site, customer will invoice but it will not hit the revenue account, rathet it should hit accrued revenue.

4 Once the installation is complete, customer will recognize the COGS and the Revenue in my books.

Appreciate if you any one could throw light on how to deal with such scenario.

[Former Member]

Hello,

You have to use RA for this. There are 7 standard SAP methods of RA calculation.

In your case, you need to choose revenue realization method E for calculating RA in OKG3.

Define status based valuation methods:

1. Status REL, calculate WIP, no COS, no REV

2. Status DLV, calculate WIP, no COS, Revenue surplus = Invoiced revenue

3. Status based on Installation/commisioning, make WIP=0, create COS, Create Revenue= billed amount

For the help on customizing RA, pl go to help.sap.com.

Thanks,

Sourabh

[Former Member]

Hi Rakesh/ Sourabh

Thanks for the contribution and proper direction. I need further clarity on this. can you send your contact details to the following mail id pl:

williamdale45@yahoo.com

[Former Member]

Hi,

This is standard business scenario of MTO. You need to use Result Analysis functionality to recognise revenue. Project settlement process is also required. Based on your requirments select revenue calculation method in RA. Revenue will be recognised on final posting into customer account / project.

Hope this will help you.

Regards,

Rakesh Pradhan

[Former Member]

Thanks for the reply.

Can I use SAP standard RR functionality for this?