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service company rev rec

The service company has Project and ARM module, but we could either use them or not use them for rev rec purpose. This is for time and material projects, and we understand percentage of completion ones will be handled differently. Here are two ways I'm thinking of, could you kindly help me confirm if they make sense and if there's another best practice that you would recommend. I'd appreciate it.

1) Use ARM module and set items rev rec rules as triggered by fulfillment. Add hours as line items on the sales order, as the work are completed, fulfill those hours

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