revenue recognition managment for microsoft dynamics ax

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Revenue Management for Microsoft Dynamics AX


Example of Companies using Armanino’s Revenue

Management Solution for Dynamics AX


Q. What types of companies typically use Armanino’s

Revenue Management for Microsoft Dynamics AX?

A. Any company that sells multi-element arrangements or

bundles. A few examples include:

• Electronics OEMs

• Industrial Equipment Mfrs

• Software Companies

• Telecommunications

• Electro-Medical Device Mfrs

• And many more


Any packaged combination of

items such as (but not limited to):

• Multi-software offerings

• Software and services

• Software, hardware, and services

• Hardware, post contract support and

warranties

Examples of Multi-Element Arrangements

or Bundles

Software

Services

Hardware

Warranties

Support

The challenge is each of these accounting units needs to be recognized

individually to ensure appropriate accounting. If companies do not determine

value of (or break out) multi-elements, they have to treat the arrangement as a

single unit of accounting. This results in the deferment of more revenue upfront.


Armanino’s Revenue Management Module for Dynamics AX addresses

many of these common business scenarios:

• Selling packaged bundles such as software packages, software and

services, hardware plus post contract support (PCS) and warranties, etc.

• Accounting needs to identify & allocate appropriate revenue to each element

• Manage the automatic deferral and recognition of revenue

• Recognize revenue upon events or with an

amortization schedule

And enables companies to:

Specify multiple elements or accounting units

within bundles

Defer recognition until customer acceptance

Handle mid-month contracts, adjustments,

and co-termination

Business Challenge & Revenue Management Solution

Bundle

Item #1

Revenue by unit

Item #2

Revenue by unit

Item #3

Revenue by unit


1. Companies that sell multi-element arrangements must follow specific accounting guidelines under GAAP (EITF 08-01, EITF 97-2, ASU, etc).

2. Revenue management is about determining the appropriate amounts & timing of revenue recognition.

3. With Armanino’s Revenue Management for Dynamics AX Module, companies can automate their entire revenue deferral, reallocation and carve out, and revenue recognition routines.

Fundamental “Take Aways” regarding the Principals

of Revenue Recognition


Core Concepts of Revenue Management

Determining the Estimated Selling

Price

Identify Essential vs. Non-Essential

Elements

Allocations: Revenue Carve

Outs & Reallocation

Revenue Deferral

Timing & Amount of Recognition

Revenue Amortization

Schedules


• EITF 97-2 & 98-9 – Residual method of accounting

• EITF 81-1 – Contract accounting

• EITF 08-01 (ASU 2009-13): Multiple deliverable revenue

arrangements

• EITF 09-03 (ASU 2009-14): Deals with arrangements that

include both hardware and software elements

Revenue Recognition According to GAAP

GAAP Generally Accepted Accounting Principles

GAAP provides guidelines for acceptable revenue recognition practices for a

given industry with specific considerations that need to be interpreted for each

company.

Armanino’s Revenue Management for Dynamics AX provides a flexible

parameter driven setup to automate the appropriate revenue calculations, deferrals

and recognition events – to comply with these GAAP requirements.


Revenue rules determine recognition timing

• Immediately upon invoicing

• Deferred until an event, partial fulfillment or % based recognition

• According to an amortization schedule

Recognition schedules can be static, dynamic, edited

• Static - Fixed over 12 months

• Dynamic –12 months, amortized over 13 periods, daily

calculations, with future start dates

• Catch up – Spread over defined start/end date for co-termination

• Edits & Adjustments – Adjust recognition start dates, hold until

customer signoff, returns and cancellations

Revenue Deferral & Recognition


• Automate the systematic calculation of VSOE from historical sales

• Parameter driven, systematic calculation of median price:

o At “item” or “item group” level

o Minimum # of occurrences can be set

o Configurable time period definitions

o Thresholds / tolerances for including in calculation

o Ability to auto-update the VSOE revenue price table

o Full audit trail and justification reports

Establishing VSOE Based on Median Price


Sales Order Entry & Invoice Format

BESP & Revenue Reallocation

Presented on

customer

invoice

Revenue Basis for

GL accounting

- or -


Revenue Recognition / Deferral

• Recognized revenue and cost of goods (COGs) posted to GL at time of

invoice

• Deferred revenue and COGs posted to deferred accounts

• Automated revenue schedules generated for recognition of deferred

revenue

• Workbench to review schedules - edits, rescheduling, holds, partials, etc.

• Periodic routine or batch job auto-creates revenue recognition journals

• Full drill down of all postings & audit trail of all changes


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Partner Customizations

Customer Development

Dynamics AX 2012: Where does the Revenue Management

Module from Armanino fit in?

User Layer (User

Preferences)

Customer Layer

(Customer Development)

VAR Layer (Partner Customizations)

ISV Layer (Revenue Management)

Microsoft Dynamics AX 2012

Module sits here


• Microsoft Dynamics AX VAR since 2003

• 70+ certified AX consultants

• 4 Customer Excellence Award Winners

in the last 3 years

• Dynamics AX ISV TAP Program

• High Tech Industry Solutions:

o Revenue Management

o High Tech Manufacturing & Distribution

o Distributor Sell-Through Management

o Supply Chain Interface

• Dedicated post go-live support desk

About Armanino


Learn More about Armanino’s Revenue Recognition

Management Module for Dynamics AX

For questions or to schedule a demo,

contact:

John Van Metre

Sales & Business Development

408.712.0743

[email protected]

Visit us online:

http://learn.amllp.com/revenue-recognition-

management-for-microsoft-dynamics-ax

mailto:[email protected]

revenue recognition managment for microsoft dynamics ax

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