Unlimited Rev Rec -- Good Practice?
We have a requirement, to create a Revenue Schedule based on Order creation for 3 year term upfront, as the customer is paying upfront for the 3 Years, without generating any invoices.
I thought the best option was to use the Custom Unlimited Rev Rec Rule, which allows creating Revenue Schedule post the Subscription start date. Is there any downside in using this?
I thought of creating 0 value subscription- Say Subscription #1 , and then creating a Rev Schedule for this subscription for 3 years by defining my custom revenue value.
We will have another subscription - Say Subscription #2 for the customer that will send out invoices every month, but the values may vary and not match to the already define revenue for this customer every month. To prevent revenue schedules from being created again (Since this is essentially a duplicate, created only to send out actual invoices), i thought of associating again a Custom Rev Rec rule, but will not distribute revenue on this subscription manually. This will ensure that there is only one revenue schedules for this customer over the 3 years.
But we will track the AR and deferred revenue from this Subscription #2's invoices.
With this method at the end of 3 years or earlier, the Deferred Revenue total will be equal to the Net Recognized Revenue at the end of 3 years.
If at anytime in before the 3 year period, the total sum of Invoices exceeds the initial prepayment value made by the customer, then I would like to recognize the additional revenue going forward.
Therefore the solution I thought of was to Update the product Catalog, specifically the rev rec rule on the rate plan charge (that is line item on Subscription #2) to use Zuora defined Rev Rec rule "Recognize Daily over time".
Please let me know if you require more information.