Usage-based billing for Fixed fee contracts with % complete revenue recognition
Problem statement: For professional services fixed fees contracts, the invoicing is done according to the milestones. However, the revenue must be recognized over time, as the work is completed using % complete and not based on billing milestones.
Additionally, contracts are booked on the order upfront for the total value of the fixed fee in the contract (TCV). This requirement also applies to professional services T&M contracts but is based on estimated hours to complete the project.
We intend to use OSS usage billing to solve the above but have run in a few and constraints -
- For usage lines, the TCV is always zero at the subscription product level. If TVC=0, it would potentially cause revenue allocation issues in RMCS and impact upfront booking of the total value of the fixed fee.