Dynamics 365 For Operations Tip: Vendor Prepayments and Revenue Recognition for Fixed Price Projects

Hello, Good to be back here on the blog !!! Jumping straight into the topic here today about a new addition of a feature for vendor prepayments in relation with fixed price project revenue recognition !!

Issuing large amounts of prepayments to vendors is often a common business requirement for large scale, long-term fixed price projects, which involves a lot of sub-contracted work. Vendors often request prepayments for the subcontracting services they are contracted to deliver for these projects. These prepayments can sometimes be just a flat amount based on mutual decisions, or it can sometimes be a percentage of the total cost of the subcontracting service. There can be several months of gap between when the prepayments are issued and when the vendors actually deliver the services.

For such projects, customers usually recognize revenue on a percentage completion basis and need the ability to include these vendor prepayments in the project percentage completion calculation of the project for revenue recognition/revenue estimates calculations.

In this post, we will evaluate one of the new features of Dynamics 365 For Operations (Referred as D365 – Operations from here on), which allows us to consider these vendor prepayments automatically when running the monthly revenue recognition/estimates for fixed price projects for calculating the % completion of the project.

For this demonstration, I have setup a fixed price project and the associated contract already. This project is setup to recognize revenue on a % completion basis.

Contract Setup

Project Setup

The Project Manager has created and submitted the purchase requisition for approval so that the services can be procured from Rebar Supply Co. Ltd. See screenshot below.

PR Submitted

The purchase requisition gets approved by the designated manager and the Purchase order is automatically created. See screenshot below.

PR Approved

The Project procurement team/Project manager then sets up the prepayment details on the project purchase order that was automatically created upon approval of the requisition.

PrepaySetupOnPO

Finance and Accounting team now processes the prepayment invoice to initiate the prepayment to the vendor.

Prepay Invoice

Prepayment

Now that the finance team has processed the vendor prepayment for the subcontracting work, let us now go ahead and see what happens when they run the monthly revenue recognition process for this project.

Notice that system was able to consider the vendor prepayment cost for the project and was able to determine the percentage completion based on the total project budget/forecast defined. See screenshot below

PComp

When this revenue recognition entry is posted, the revenue amount (based on Percentage complete and the total contract value) will be posted to general ledger. We all know how it works from here 🙂

That’s it for today !!

Sandeep

Sandeep ChaudhurySandeep Chaudhury is a Dynamics 365 enthusiast with over 10 years of experience in functional consulting, Solutions architecture and systems integration, with expertise in the areas of Professional services automation(Project Management and accounting), Financials Management, Services Management, Sales and Marketing, Human resource management, Travel and Expenses Management and Procurement & Sourcing modules of Microsoft Dynamics 365 ERP. He has experience working with the Dynamics 365, AX 7, AX 2012 R3, AX 2012 R2, Dynamics 365 for Operations and more.

Who said Transitioning to a Recurring Revenue Model for Software Companies Would Be Easy?

While it may not be easy to transition from a license-based model to a recurring revenue model, the benefits are clear.  And, more importantly, it isn’t really an option for most software developers and resellers.  If you own or manage a software company and want to remain competitive in a subscription economy, it is imperative.

For that matter, it isn’t just software companies that are facing a fundamental change to the way revenue is captured and recognized.  From software and computing power to healthcare, specialty manufacturing and retail products like razors, we’re seeing a constant stream of new subscription-based offerings.  Most B2B professional services companies have added subscription options to the list, and many have moved to it entirely.  SBS Group has helped a wide range of Dynamics AX customers in the software sales and the reselling sector as well as other B2B firms like online survey companies and industrial equipment service providers.

Even the music industry has been entirely reinvented in the wake of the subscription frenzy.

Digital Experiences Are What the Fans Want

A report published by the Recording Industry Association of America (RIAA) said music streaming revenues for the first half of 2016 reached $1.6 billion—a year-on-year increase of 57%. According to the 2016 Mid-Year RIAA Shipment and Revenue Statistics report, revenues from subscription streaming services more than made up for a continued decline in physical product, with streaming accounting for 47% of all music industry revenue for the year to date.

Paid subscriptions to services such as Spotify, Apple Music and Google Play Music have cumulatively doubled in the last year, RIAA said.

Around 18.3 million people have signed up for a subscription-based plan from music streaming services—a year-on-year increase of 101%. Subscriptions were responsible for 30% of all music industry revenues in the first six months of the year, with revenues from a permanent digital download falling by 17%, the report said.

See “How Paid Subscriptions Are Saving the Music Labels”, an article written by David Bolton in September 2016.

Love that title: “Digital Experiences Are What the Fans Want”.  I couldn’t have said it better.  In our case, the “Fans” may be consumers or businesses looking to acquire access to software in a way that they’re most comfortable with.  And if software companies want to stay in business, they need to adapt their business model in a way that gives the fans what they want.

Of course, this isn’t entirely about giving the fans what they want.  While accessibility, cost and ease-of-use are some of the more commonly cited reasons for the subscription approach, there are many other benefits like:

  • Increasing the likelihood of a successful IPO or Acquisition
  • Lowering barriers to customer engagement (lower up-front costs)
  • Allowing customers to scale more easily
  • Adopting a more agile development and update cycle
  • Maximizing customer lifetime value (CLV) and brand loyalty
  • Driving a predictable, recurring revenue stream

Of all these things, it is the seller’s path to a predictable, recurring revenue stream which may be the most enticing reason to move forward under a subscription model.  The transition from traditional license and maintenance models to cloud subscription and consumption usage is not easy and requires adjustments to future revenue expectations, recreating sales compensation plans and more.

Either way, it is a trend that has been changing the face of revenue management for the last decade and will continue to do so.  Adapting systems, processes, and policies to help your organization thrive in a subscription world is often a challenge for most established technology companies.

I can’t help you figure out how to replace revenue that used to come up front.  You’re on your own there (with the rest of us).  I can provide an option for optimizing the way you collect and recognizing your new recurring revenue stream.

 

AXIO for Professional Services - The New Microsoft Dynamics AX

Fig 1: Finance, Professional Services and Distribution for AX7

 

Adapting ERP to Subscription / Recurring Revenues for Software Firms

Dynamics AX is one of the most attractive enterprise ERP solutions that lends itself to a recurring revenue model, but not everything a software developer, publisher or reseller requires is provided in the solution right out of the box.  No worries, because we have already tackled this one for you.  SBS Group has created AXIO for Professional Services, an enhanced version of Dynamics AX that caters to the needs of enterprise professional services firms.

To my knowledge, AXIO is the only partner solution capable of managing the entire business process and handling the complexities of the latest revenue recognition standards and subscription billing on AX7.

Some 3rd party providers have created add-ons to AX 2012 but have yet to update or rewrite their solutions to work in the pure cloud environment of AX7.  To my knowledge, SBS Group is still leading the charge here with a fully functional solution that not only caters to project-oriented technology company using AX 7, but provides the ability to meet IFRS15 and ASC 606 accounting standards requirements for revenue recognition.

I have another post on IFRS 15 and ASC 606 if you would like to learn more on this topic.

 

Contract and Revenue Management Workspace with AXIO for Dynamics AX

Contract and Revenue Management Workspace

Tools in AXIO Professional Services for AX7 and Dynamics 365 can streamline you revenue management process

AXIO Professional Services for AX7 and Dynamics 365 not only handles the complexities of the license to subscription pricing evolution that software sellers will experience.  Our Revenue Management Module effectively manages a contract lifecycle within AX. This module tracks a contract from the time of negotiation to acceptance, works-in-process, and then retirement.

It helps them to address key issues like:

Contract Initiation

After contracts have been accepted and signed by the customer, it is imperative that your ERP system is capable of helping your team accurately manage revenue throughout the life of the relationships.  AXIO can automate one-time billing or recurring periodic billing by month, quarter or annually. Advanced payments, payments in arrears or even partial payments are easily managed.

Managing Renewals

Our renewals management features not only help to manage contract renewals after a contract term has ended, but helps to drive customer renewals as they near expiration.  Contract managers or sales team members can utilize consolidated dashboard views of the customer to view relevant history and ensure optimal renewal rates.

  • Easily update pricing and terms
  • Adjust effective dates for new agreements
  • Prorate payments as changes occur and even adjust the billing process
  • Notify sales and consulting team members with pricing changes to ensure optimal communication

Contract Realignments

In the software world, change is constant.  Customers often need to adjust multiple times thought the contract for reasons like adding users, modules or increasing user counts due to seasons or growth.  AXIO allows your team to change the terms of contracts mid-way (change the value and or contract periods) without missing a beat.

Billing, Billing Frequency, and Modify Billing Frequency

This module provides automated billing features with various types of billing frequencies and billing options like monthly quarterly, half-yearly, yearly and non-linear (custom billing dates). It also provides the ability to change billing frequency mid-way of the contract period.

Revenue Management

AXIO enables an automated revenue management process for both fixed price and variable price contracts that allows your firm to adapt as revenue recognition standards evolve.  No more unreliable spreadsheets or manual calculations.ASC 606 and IFRS 15 Steps

Workflow Integration

Because AXIO Professional Services for Dynamics AX is built on the Microsoft platform, the opportunity to integrate with customer relationship management solutions like Microsoft Dynamics CRM is relatively simple.  Kick off workflow processes that provide alerts to sales and consulting team members or nurture customers as contract changes approach.  Consistent, timely and communication around contracts keeps customers informed and drives a positive customer experience.

Used in conjunction with Microsoft Dynamics Core Financial capabilities, the Revenue Management module streamlines the contract management process and gives your financial staff the tools they need to ensure that contract terms and conditions are enforced.

You really must see it to appreciate it.

Please reach out to me directly or to anyone on the SBS Group team if your firm is struggling with revenue management.  It isn’t easy to change your business model, but your ERP solution shouldn’t make things more difficult.

Best regards,

Robbie Morrison
VP Enterprise Solutions and Services, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem helps SBS Group customers maximize benefits from the ERP investments.  Robbie

Today, Robbie serves SBS Group customers in his role as Vice President, Enterprise Group where he provides thought leadership and manages the enterprise delivery team.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison


 


Want to learn more about AXIO for Professional Services and Dynamics 365? Watch our latest webcast recording!

Dynamics AX Tip: Percentage complete calculation for revenue recognition, based on WBS Work Percentage Complete for fixed price projects

Traditionally, the 2 primary methods of revenue recognition for a fixed price project were the “Completed Percentage” and the “Completed Contract” methods. I have explained how these work in Dynamics AX for revenue recognition of fixed price projects in my earlier posts.

With the AX 2012 R3 release (CU 10), the straight line method for revenue recognition was introduced, which I also elaborated in this earlier post.

When you work with the Completed percentage method of revenue recognition, there are multiple ways to determine the percentage completion of a project. Some of these options are,

  1. Manage percentage completion on a manual basis
  2. Use project budgets or forecasts to the system automatically keep track of % complete.
  3. The new method to calculate % completion on a project is based on the WBS percent complete. In this quick post, we will how this works.

The first step for this is to setup the Cost template and select the Completion based on as “Work percentage complete”. See screenshot below.

Cost Template Setup

Once you have that, associate it with the project group. See screenshot below.

Project Group

The next step is to setup the fixed price project and establish the project plan, which is basically the work breakdown structure. Once you have your WBS defined and the cost estimates established, Dynamics AX will automatically keep track of the “Percentage completion” for the project based on the WBS estimates vs the actual transactions. I have setup a very basic WBS for this walkthrough.

WBS

After I have progressed in the project and transactions (Timesheets, Expense reports, Purchase orders, journals etc.), Dynamics AX automatically starts tracking the % complete for the project at each task level of the project. See screenshot below.

Percent Complete

Let us say, at this point you are ready to run the revenue recognition for this project for the Month of August 2016.

Navigate to the Project revenue recognition screen and click Create. You will notice here that “Work progress percentage” is a new option under the “Cost to complete method” dropdown. But we will just leave it as default (From cost template).

Notice that after we have run the revenue recognition, system automatically shows the Percentage completion based on the WBS work percent complete.

Revenue Recognition Percentage

The process after this is pretty straight forward and as you would run the revenue recognition typically for the fixed price project.

NOTE: The intention of this blog post was not to explain the end to end process of revenue recognition for fixed price projects. I have explained these in detail in my earlier posts. This post was specifically a quick tip to highlight the new method of automatic work percent complete calculation.

Regards,

Sandeep

Sandeep ChaudhurySandeep Chaudhury is a Dynamics AX enthusiast with over 10 years of experience in functional consulting, Solutions architecture and systems integration, with expertise in the areas of Professional services automation(Project Management and accounting), Financials Management, Services Management, Sales and Marketing, Human resource management, Travel and Expenses Management and Procurement & Sourcing modules of Microsoft dynamics AX ERP. He has experience working with the new Dynamics AX (AX 7), AX 2012 R3, AX 2012 R2 and more.

 


Want to learn more about AXIO for Professional Services and Dynamics 365? Register for our webcast on September 13th at 2 PM EDT.

AXIO for professional services webcast

Will you be ready for the impact ASC 606 and IFRS 15 will have on your business?

“Why all the fuss?  These changes don’t really take effect until 2018.  Plenty of time. Right?”

Wrong.  If you’re a professional services firm or deal with complex contracts or recurring contracts of any kind then you definitely don’t want to take the “plenty of time” approach to ASC 606 and IFRS 15.

It is true that the new rules governing revenue recognition for contracts will go into effect for most companies in 2018. The Financial Accounting Standards Board (FASB), which administers Generally Accepted Accounting Principles in the U.S. (US-GAAP) has issued ASC 606, and the International Accounting Standards Board (IASB), which administers International Financial Reporting Standards (IFRS) used in most other countries, has issued IFRS 15. Both will enforce similar, fundamental changes to the revenue recognition process for any company that depends on complex contracts in their dealings with customers.

ASC 606 and IFRS 15 Steps

How do I know if my company will be impacted by ASC 606 and IFRS 15?

As you can imagine, this will include just about every business services firm from accounting to engineering, technology services and business consulting.  Any organization that accepts complex contracts for projects to be delivered over a period of time will need to get their house in order.  Stops there?  Not at all.  In today’s digital world, there are scads of hi-tech firms that sell software or other technology services on a subscription basis. Wait for it … “in the cloud”.  Subscription software sales often come with recurring contracts that are structured using tiered pricing or volume discounts or routinely involve modifications, such as adding or dropping users, or that allow buyers to increase/decrease services seasonally.

The list is long and if you’re reading this post, you’re more than likely working for a company that will need to make preparations sooner than later. If so, you may want to listen to a podcast for professional services companies we hosted recently where experts from Microsoft and SBS Group discuss contract management and revenue recognition for companies using Microsoft Dynamics AX.

The bottom line is that revenue recognition has evolved into a complex and confusing set of regulations and requirements which tend to vary in practice from industry to industry and country to country.  Acquiring a new single core accounting standards principle guideline is part of the FASB’s goal of converging US GAAP with International Financial Reporting Standards (IFRS).  Ultimately, IFRS and US GAAP will share the same guidance on revenue recognition, substantially eliminating most differences.

What really changes with ASC 606 and IFRS 15?

The most notable change from ASC 606 and IFRS 15 will be in how revenue (and some corresponding expenses) related to complex contracts is recognized.  Meeting specific “performance obligations” will be the measure by which customers are considered to be satisfied.   Only when customers are satisfied, rather than when internally measurable events occur (such as delivery, completion of milestones or the passage of time) can revenue be recognized.

Think about that for a moment.  This isn’t just an accounting standards change for the bean counters in your company.  This will impact everyone from sales through delivery.  Why?  In many firms, this will create a variance in “when” revenue happens that doesn’t necessarily align with historic performance to plans or budgets.  You may sell it in January and deliver 80% of services shortly thereafter, but until the performance obligations are met…no revenue recognition.  Executives will need to sort out actual-vs.-plan variances caused purely by accounting events such as a failure to receive documentation to trigger recognition, and those that reflect “real” events such as a shortfall in sales or labor overruns.  Even timing of sales commissions or other incentives tied to recognized revenue will be impacted.  Everyone gets to play.

Organizational Impact ASC 606 and IFRS 15

 

When and how should we prepare for ASC 606 and IFRS 15?

The new revenue recognition accounting standards supersede most existing industry- and transaction-specific guidance. Its purpose is to improve the revenue recognition portion of financial statements and increase the consistency of financial reporting globally.

U.S. filers are expected to adopt the new accounting standards their first reporting period after December 15, 2017. However, they have the option to adopt ASC 606 one year earlier than the requirement. For most companies, financial statements released in 2018 will be the first in compliance with ASC 606. In order to ease the transition, the Boards allow filers to use practical expedients in their application of the new accounting standards and choose between two adoption methods (full- and modified-retrospective).

Regardless of deadlines set by the accounting standards boards, if you are a project-driven business or you rely on complex contracts or recurring contracts of any kind to generate revenue, the time to prepare is now.  Adapting processes, updating or replacing software and updating forecasting models don’t happen overnight.  Certainly not at the last minute.

SBS Group customers leveraging our AXIO solution for Microsoft Dynamics AX already have the necessary tools in place and most will experience a smooth transition.  Our solution uniquely addresses the complexities of project-based businesses. AXIO for Professional Services spans all the important processes in your firm – resource management, project management, marketing, human capital management, and financial management – to give you unparalleled insight and control of all of your critical business functions. Built on the Microsoft Dynamics AX platform, it is optimized for cloud, on premise, or hybrid deployment. Dynamics AX provides proven global scalability and enterprise-class extensibility and AXIO is compliant with all GAAP, IFRS, Sarbanes-Oxley, and DCAA requirements.

AXIO Contracts And Revenue Management Workspace.png

AXIO Contracts and Revenue Management Workspace for Microsoft Dynamics AX

Many companies, even those with enterprise ERP and high-end forecasting tools, will need to build a plan to implement process updates and retool the development of complex contracts.  Firms relying entirely on Excel or outdated planning and project management solutions may find the need to purchase and implement new software even before other processes can be adapted.  It will take a comprehensive, collaborative effort to realign business planning and budgeting as your back office team adapts to these new accounting standards.

If your company is considering or currently using Microsoft Dynamics AX and would like to spend time with an accounting and technology expert from SBS to better understand the impact of ASC 606 or IFRS 15, please reach out through our website today.

Check it out yourself by attending one of our educational webcasts. Click here for webcast times and registration.

Thanks for reading and I hope you the best in your transition to the new ASC 606 and IFRS 15 standards!

Sreepathy Nagarajan

Senior Solutions Consultant
SBS Group

 

Part 2 – Technical Overview of Advanced Contract Management in Dynamics AX with AXIO Professional Services

In our earlier post, Robbie Morrison explained how the Advanced Contract Management Module of AXIO for ProServ can help hi-tech consulting and services firms to manage their complex and ever changing business contracts effectively and help minimize revenue leakage with its enhancements for the contracts and projects management functionality of standard AX, while meeting all the requirements of the new IFRS 15 standards. Robbie also provided a sneak peek into the various enhancements that are available for Dynamics AX in the AXIO Professional Services Solution.

In this post, we will deep dive more into some of the specific features and functionalities of the Advanced Contract Management Module that were highlighted in the earlier post. We will specifically take a look at the following 2 functionalities and understand how these can help the hi-tech consulting and services firms to streamline revenue recognition and also automate the contractual changes and associated financials postings.

  • Advanced Revenue Recognition
  • Automated Contract Realignments
So, let us take a scenario where Contoso Consulting USA, a hi-tech services provider of Cloud Services, Hardware Services and IT Maintenance Services has several business contracts of different types such as Subscription based Fixed price, engagement/Milestone based fixed price and more with its customers.
Let us see how AXIO’s Advanced Contract Management module can help Contoso to streamline and automate the revenue recognition for the subscription based fixed price contracts for the Cloud Services they provide to their customer “Shrike Retails”.

 

For this demonstration, the Contract is already setup in the Contract Management Module and is already in effect. This is a subscription based contract and it is in effect from 01/01/2016 with yearly contract value of $ 120,000. The contract is also setup to be billed quarterly and for automated renewal with a price increase of 5% every year. The revenue recognition is setup to occur Monthly.

 

AXIO Advanced Contract Setup for Dynamics AX

Screenshots below shows the contract setup details and various parameters for the contract.

 

Contract Setup in AX with AXIO Professional Services for AX

Fig 1: Contract Setup in AXIO for Dynamics AX

 

Billing and Revenue Recognition Setup with AXIO for Dynamics AX

Fig 2: Billing and Revenue Recognition Setup with AXIO for Dynamics AX

 

Contract Renewal Setup in AXIO for Microsoft Dynamics AX

Fig 3: Contract Renewal Setup with AXIO for Dynamics AX

 

Let us now go ahead and see how Teresa, the Contracts Billing analyst can easily process the revenue recognition for this contract for first month of the contract, i.e. January 2016.
AXIO’s Advanced Contract Management module provides a dedicated workspace for the Contracts and Revenue Management activities for making the team members more productive and achieve more, all at one central workspace. So when Teresa logs into AXIO and goes to the Contract and Revenue Management workspace, she gets to see the critical contract management related data, visual dashboards for quick insights and also the details of the contract such as “who the customer is”, “the total contract value”, “how much has been billed till date and how much remaining”, how much revenue has been recognized till date and how much remaining” and more.

 

Contract Management Module Main Menu with AXIO for Dynamics AX

Fig 4: Contract Management Module Main Menu

 

Contract and Revenue Management Workspace with AXIO for Dynamics AX

Fig 5: Contract and Revenue Management Workspace

 

Run Revenue Recognition

Staying within the same workspace, Teresa finds the Contract for Shrike retail for which she needs to process revenue recognition for the month of January 2016. She selects the contract record and clicks “Run Revenue recognition” and then selects the Revenue recognition date.
Run Revenue Recognition with AXIO for Dynamics AX

Fig 6: Run Revenue Recognition

 

She then selects the Revenue recognition date and clicks OK to proceed to the next screens which will show the summary of the revenue recognition for this this month.
Run Revenue Recognition Process with AXIO for Dynamics AX

Fig 7: Run Revenue Recognition Process

 

Revenue Recognition Details for Dynamics AX with AXIO

Fig 8: Revenue Recognition Details

 

Teresa finally reviews the details and posts the revenue recognition and she is able to do this with just a few clicks.
AXIO Revenue Recognition Processing Details for AX

Fig 9: Revenue Recognition Processing Details

When Teresa navigates back to the Contracts workspace, she can see the Revenue recognized till date and remaining to be recognized. The screenshot below shows the Revenue recognition data after Teresa processed the revenue recognition.

Revenue Recognition Data for Dynamics AX with Axio

Fig 9a: Revenue Recognition Data

 

Important Note: In AXIO, you can setup the revenue recognition to run automatically in a batch based on a predefined schedule, so that your team members does not need to run the process manually every month. Screenshot below shows the automatic batch option for running revenue recognition. For the demonstration in this post, we are running the process manually.

 

Run AX Revenue Recognition Automatically in Batch with AXIO Professional Services

Fig 10: Run Revenue Recognition Automatically in Batch

 

Now that we saw how Teresa was able to easily able to process the revenue recognition for the contract, let us go ahead and see how AXIO helps her to manage contractual changes. In the cloud era of simplified and flexible computing, frequent changes to contracts and service options are very common. Customers have the option of scaling up and scaling down the level of service they subscribe for at any time. So in this case, let us assume Shrike Retails want to cut down on one of the package of the Service subscription they signed up for originally. Due to this, the total contract value now needs to be reduced to $ 96,000 from the original value of $120,000. This means the total amount billed and total revenue recognized so far on the contract also needs to be adjusted accordingly to update the financials.

Realign Contract Value in Dynamics AX with AXIO

The Realignment functionality of AXIO’s Advanced Contract Management Module makes the experience seamless by automating the end to end adjustments, so that your contract team members can focus more on improving customer service and worry less about the manual financial adjustments.
To process the Realignment of the contract, Teresa, goes back to the Contract and Revenue Management workspace and selects the contract for Shrike Retail and clicks Realign Contract button.

 

Realign Contracts and Revenue Management with AXIO for AX

Fig 11: Realignment of a Contract

Since the contract price needs to be adjusted in this case, she selects the Price option on the Realignment form and processes the Realignment.

Run Realignment of Contract Price in Dynamics AX with AXIO

Fig 12: Run Realignment of Contract Price

She then enters the new Contract value, which is $96,000, verifies the details and finally submits the realignment for review and acceptance.

Teresa runs realignment with AXIO for Dynamics AX

Fig 13: Teresa Runs Contract Realignment

 

At this point, the Contracts Responsible person for approvals, reviews the details of the contract value adjustment. AXIO also shows them the complete preview of the financial adjustments that will be automatically processed for revenue recognized and amount billed after they accept and post the realignment.
The screenshot below shows that the revenue recognized on this contract needs to be adjusted automatically since the contract price is changing. With the original contract price of $ 120,000, the revenue recognized for month of Jan 2016 was $ 10000, and due to the reduced contract price, the system is automatically going to post the revenue adjustments. Had there been any amount billed on this contract, this functionality will also create the billing adjustments automatically.
Realignment Review and Posting in AXIO for Dynamics AX

Fig 14: Realignment Review and Posting

Teresa now goes back to the Contracts Management workspace to review the revenue recognition adjustment details. She sees that the revenue has been adjusted from $10000 to $8000, due to the contract price reduction.
Real-time Contract Management Scenarios

Fig 15: Real-time Contract Management Scenarios

Other Advanced Contract Management Features for Dynamics AX

So, the above post was just a glimpse for some simple real time contract management scenarios and also we specifically discussed 2 of the specific features. The Advanced Contract management module also automates several other aspects of contracts such as Advanced billing policies, Advanced invoice distribution, automated contract renewals and more.

Live Demonstration Video

Click here to see live videos AXIO Professional Services and Contract Management in action!

Stay tuned for our future discussions on AXIO’s Advanced Contract Management solutions.

 

Sandeep Chaudhury
Solutions Architect, Dynamics AX
SBS Group
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