Why Incorrect Rev Rec rule and the Rev Rec forecast rule in the Revenue Recognition

Question

Hi Team,

I've noticed an issue where, upon creating Revenue Recognition based on a sales order, the Revenue Recognition Rule and Revenue Recognition Forecast Rule applied do not match those defined in the item master record.

Does anyone know why this might be happening?

Thank you,

Janakan

Clarisa De Torres-Oracle · Accepted Answer

Hi @Janakan, may we know if the Sales Order has a posting discount item included? Per SAID 49224:

"Revenue arrangements generated from transactions with a posting discount have the Create Revenue Plans On value set to Billing for all elements.

NetSuite uses the Default One-Time Direct Posting revenue rule for all elements in these revenue arrangements. This revenue rule creates a one-time revenue recognition plan with the same start and end date."

With this, possible reason why the Revenue Arrangement was posted as Default One-Time Direct Posting is because you have a discount item that is posting on the sales order. What you encountered is by design due to the setup of Discount item.

The ability to use Posting Discount and Markup items to a revenue recognition process using the revenue recognition rule set up in the item record is currently an enhancement request logged under #480902 ARM: Sales Transactions with Posting Discounts > Discounts are immediately recognized upon billing while for non-discount items Create Revenue Plans On = Billing & Revenue Recognition Rule = Default One-Time Direct Posting.

Workarounds provided are:

Option 1: Use a non-inventory or service item to serve as the posting discount. A negative revenue element will be created to record the discount over multiple periods and the other items will retain their Create Revenue Plans On setting.

Option 2: Use a non-posting discount. The discount will be implicitly included in the revenue arrangement. The other items will retain their Create Revenue Plans On setting.

You can go to SuiteIdeas page to vote for the enhancement.

Apologies for the inconvenience this limitation may be causing you, but I hope this helps clarify your concern.