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Rev rec in service period

Inr egards to billing overage fees for usage, is there a way to recognize revenue for the 'service period' as opposed to the invoice date or target date? 

 

Example: I bill monthly overage fees for usage. I'd also like to bill "in-advance" the following month subscription. Instead of sending two invoices (one dated 9/30 and one dated 10/1), I'd like to send one invoice on 10/1 to include overages from September as well as Octobers subscription fee. The problem I run into is when I generate the journal entries, it doesn't bring the overages into Septmeber, the correct month. It keeps them in October.

 

It's challenging to explain what is happening. Does this make sense?

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Zuora Staff

Re: Rev rec in service period

Hello,

 

The revenue recognition rule must be set up for daily over time.  Here is the article describing each model: https://knowledgecenter.zuora.com/CC_Finance/Revenue_Recognition/Revenue_Rule_Models

 

In the model, you can edit the revenue recognition rule in your finance settings > Manage Revenue Recognition Rules > Edit under actions > Change the Recogniton Term Start date and Recognition Term End date to invoice item service period start and end date from the drop down menu. Attached is a screen shot of this section to update.

Screenshot (3).png

 

You will also need to update the Product in the Catalog > Update the Timing and Frequency Charge. The timing should be in Advanced. Here is the article describing how the Billing Timing works.

 

The billing for usage needs to have the settings enabled to be ensure the charges are in the correct period. Here is the article for Usage Charges :

https://knowledgecenter.zuora.com/BC_Subscription_Management/Subscriptions/G_Proration/A_Proration_f...

 

Lastly, you can review the article for Billing Period Alignment for charges: 

https://knowledgecenter.zuora.com/CB_Billing/WA_Dates_in_Zuora/D_Product_Catalog_Dates%3A_Product_Ra...



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Valued Scholar

Re: Rev rec in service period

sherrigriggs,

 

We also run into this problem as we bill for overages in arrears and recurring charges in advance.  Our solution for this after running the billing for the month, I run the revenue detail report and find the GL code for usage or overage charges.  This should give you a total of the overages that should be in the prior month accounting period.

 

On our general ledger, we would book a reversing entry for 9/30:

DR Unbilled A/R

CR Overage Revenue

 

On 10/1, the journal entry to reverse would be:

DR Overage Revenue

CR Unbilled A/R

 

When you book the entry from Zuora, the overage revenue should net to zero in October.

 

This will ensure that the overages are recorded in the proper billing period without screwing up your A/R balance for balance sheet reconciliations.