1.1.revenue SD Revrec

SAP R/3 SD REVENUE
RECOGNITION -
BEST PRACTICE
Knowledge Document
Version 1.4
SAP R/3 SD
REVENUE RECOGNITION -
BEST P R A C T I C E
 SAP AG 07/2005. All rights reserved.
K NOWLEDGE D OCUMENT
(Based on R/3 Release 4.7)
Release:
Version 1.4 from of July 2005
Issued by:
SAP AG
Neurottstraße 16
69190 Walldorf
SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 2

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Revenue Recognition - Best Practice Table of Contents
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1 GENERAL RECOMMENDATIONS...........................................................................6
2 DESCRIPTION OF BUSINESS AREA.....................................................................8

2.1 The available methods include:................................................................................................................8
2.2 The trigger and impact of the methods are:............................................................................................8
2.3 Typical Core Business Processes using the methods are........................................................................8
2.4 Business Process Specific Information.....................................................................................................9
3 IMPLEMENTING REVENUE RECOGNITION........................................................10

3.1 Getting started R/3 SD Revenue Recognition........................................................................................10
Required releases and support packages.............................................................................................................10
Supported processes in revenue recognition........................................................................................................10
Starting with customizing....................................................................................................................................12
3.1.1.1 Global informations.....................................................................................................................12
3.1.1.2 Presteps........................................................................................................................................12
Customizing FI accounts and their settings.........................................................................................................14
3.1.1.3 Unbilled receivable account and deferred revenue account........................................................14
3.1.1.4 Revenue account..........................................................................................................................18
SD-Customizing...................................................................................................................................................20
3.1.1.5 SD item-categories and their settings..........................................................................................20
3.1.1.6 Customizing revenue recognition type on item category level....................................................22
3.1.1.7 Customizing revenue recognition accrual start date....................................................................24
3.1.1.8 Account determination.................................................................................................................25
4 DESCRIPTION OF CORE BUSINESS PROCESSES............................................27

4.1 Standard Revenue Recognition at time of billing..................................................................................27
General Information.............................................................................................................................................27
Business steps overview and process description................................................................................................28
Critical functions..................................................................................................................................................28
Variations of the process......................................................................................................................................28
Additional important information........................................................................................................................28
4.2 Time based revenue recognition (‘A’)....................................................................................................29

4.2.1.1 Process 2 – time based with VF44 as first...................................................................................29
4.2.1.2 Process 3 – time based with invoice as first................................................................................30
4.3 Service based revenue recognition (‘B’).................................................................................................33

4.3.1.1 Process 4 – service based with VF44 as first...............................................................................33
4.3.1.2 Process 5 – service based with invoice as first............................................................................34
4.4 Service based revenue recognition (‘B’) contract with call off............................................................37

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4.4.1.1 Process 6 – service based with VF44 as first..............................................................................37
4.4.1.2 Process 7 – service based with invoice as first............................................................................38
Critical functions.................................................................................................................................................39
Variations of the process.....................................................................................................................................39
4.5 Time based and billing related revenue recognition (‘D’)....................................................................41

4.6 Time based revenue recognition in credit/debit memo processing with a credit/debit memo request
(‘A’) 43
4.6.1.1 Process 9 – time based with VF44 as first..................................................................................44
4.6.1.2 Process 10 – time based with invoice as first.............................................................................45

4.7 Credit/debit memo revenue recognition with reference to preceding document (‘F’)......................47
4.8 Time based or service based revenue recognition recognition in credit/debit memo processing
without a credit/debit memo request (‘A’ or ‘B’)................................................................................................50
4.9 Service based revenue recognition in return processing with reference to an order (‘B’)...............53
4.9.1.1 Process 13 – service based return processing with reference to an order with VF44 as first.....54
4.9.1.2 Process 14 – service based return processing with reference to an order with invoice as first...55
4.10 Service based revenue recognition in return processing with reference to a contract and call off
order (‘B’)...............................................................................................................................................................57
5 PROCESSES CURRENTLY NOT SUPPORTED...................................................60
6 MONITORING OF THE REVENUE RECOGNITION DATA...................................61

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6.1 Monitoring aspects...................................................................................................................................61
6.2 FI-Monitoring...........................................................................................................................................62
Check Account Balances.....................................................................................................................................62
Reconcile FI and SD Values................................................................................................................................64
Automatic Clearing of Accrual Accounts............................................................................................................65
6.3 SD-Monitoring with VF45.......................................................................................................................67

VF45 Overview...................................................................................................................................................67
Selection criterias of VF45..................................................................................................................................68
6.4 SD-Monitoring with VF47.......................................................................................................................70

VF47 Overview...................................................................................................................................................70
VF47 selection criteria.........................................................................................................................................70
VF47 Error categories..........................................................................................................................................75
6.4.1.1 Account determination errors:.....................................................................................................75
6.4.1.2 Inconsistencies between VBREVK / VBREVE/ VBREVR........................................................75
6.4.1.3 Incorrect values / balances...........................................................................................................75
6.4.1.4 status problem..............................................................................................................................75
6.4.1.5 Currency problem........................................................................................................................76
6.4.1.6 Lock problem...............................................................................................................................76
6.4.1.7 Assignment problem....................................................................................................................76
6.5 SD Monitoring with VF48.......................................................................................................................78

VF48 Overview...................................................................................................................................................78
VF48 selection parameter....................................................................................................................................78
Results of VF48...................................................................................................................................................78
6.5.1.1 Upper part of the screen - Balances.............................................................................................80
6.5.1.2 Lower part of the screen - VBREVx rows (SD tables)...............................................................81
6.5.1.3 Additional function......................................................................................................................82
7 FUNCTIONAL ENHANCEMENTS..........................................................................83
8 RESTRICTIONS FROM SD SIDE...........................................................................85

8.1 General restrictions..................................................................................................................................85
8.2 Account restrictions.................................................................................................................................85
8.3 Cost restrictions........................................................................................................................................85
8.4 Adjustment restrictions...........................................................................................................................86
8.5 Restrictions for specific processes...........................................................................................................88
9 OTHER RESTRICTIONS........................................................................................89
9.1 REVREC and NON-REVREC Postings................................................................................................89
9.2 Translation of foreign currencies............................................................................................................89
10 IMPORTANT TO DO´S........................................................................................90
11 IMPORTANT NOTES..........................................................................................91

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Revenue Recognition - Best Practice 1 General recommendations
Knowledge Document
1 General recommendations
In order to comply with the latest bookkeeping principles and current regulations, like
Generally Accepted Accounting Principles (US-GAAP), International Accounting
Standards (IAS) / Financial Reporting Standards (FRS), as well as the Sarbanes-Oxley
Act, SAP provides some general recommendations and best practices for customers
using SAP R/3 revenue recognition in the Sales and Distribution component (SD).
In the whole document revenue recognition is set for SAP R/3 SD revenue recognition.
 If customers want to use the revenue recognition functionality in their productive
environment, the implementation must be subject to a pre go-live assessment to
avoid a negative impact on the financial statement. This assessment is
completely free of charge. In other words, the customer will have to ask explicit
permission from SAP in order to use this functionality (detail information provided
by note 768561 and 779366).
 As revenue recognition provides a data stream into the financial system, the
setup of the function is not only an SD task. FI consultants with experience in the
area of Balance Sheet and P&L customizing have to setup the account
assignment using SAP Best Practices and need to review the processes that are
customized in the SD area.
 Furthermore, the entire revenue recognition process should be approved by the
responsible Head of Accounting and, if necessary, reviewed by the external
auditor of the company.
 Revenue recognition needs to be implemented by SAP-certified SD- and FI-
Consultants.
 To make sure that compliance with the latest requirements is possible, always
implement the latest versions of the SD module, especially the latest notes on
revenue recognition.
 Also, SAP always recommends the application of the latest support package.
 Because of the nature of the revenue recognition function, it is necessary to
monitor continuously (at a minimum monthly) the results by using the transaction
VF45 and VF48, which delivers a process view of SD and FI and also by using
transaction VF47, which provides a more technical view.
 To implement revenue recognition in already existing processes (transfers of old
data) a detailed concept creation is necessary. For this request SAP offers
consulting, which is chargeable.
 Program modifications in a revenue recognition relevant process are discouraged
because they may have unexpected effects and may result in an incorrect data
stream for FI. Any modifications made must be very closely monitored to prevent
any negative impacts to the revenue recognition process. Additionally
modifications have to be reviewed whether they are still in line with legal finance
guidelines and regulations.

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Revenue Recognition - Best Practice 1 General recommendations
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 If the revenue recognition functionality is activated once in the productive system
landscape, a deactivation has to be declined due to the direct impact to the
accounting and the danger of data inconsistencies.
 Always get the latest version of the Revenue Recognition Best Practices Guide.
The link can be found in note 779365.
 As IS-media solution is used, there is a Revenue Recognition Best Practices
Guide available for this industry solution.
The comments in these documents are binding for all customers using the SAP R/3
revenue recognition functionality and the outlined recommendations have to be
implemented.

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Revenue Recognition - Best Practice 2 Description of Business Area
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2 Description of Business Area

Many companies require that revenues are posted according to a time period. This
means for example, that the revenues must be realized in the posting period, in which
the service was carried out, and not in the posting period, in which the billing document
was set up. The revenue recognition function in the SAP R/3 system helps you to fulfil
these requirements and separates the revenue recognition process from the billing
process. The R/3 system offers a flexible solution to companies using various methods
of revenue recognition.
2.1 The available methods include:

 Revenue recognition at the point of billing (standard method)-Event Base
 Time-related revenue recognition (the revenues are realized between specific set
dates in equal proportions) - Time Base
 Service-related revenue recognition (the revenues are realized on the basis of a
specific event, e.g. the goods issue for a delivery) – POC: Percentage of Completion
 Credit/Debit memo request with reference to preceding document
 Service based revenue recognition, billing related (only for IS-M solution) – Media
solution
2.2 The trigger and impact of the methods are:

 Revenue recognition is set up and initialized by the Sales and Distribution (SD)
processes and therefore the revenue recognition method is assigned to the item
category in the customizing of the SD module.
 Revenue recognition impacts the Financial Accounting by the account postings
and therefore two additional accounts (balance sheet accounts) have to be
created in the FI module. The accounts are: deferred revenue account and
unbilled receivable account. Detailed information are provided by note 777996.
2.3 Typical Core Business Processes using the methods are:

 Time based revenue recognition e.g. for rental contracts valid for a long time with
a periodic billing plan.
 Service based revenue recognition e.g. a service contract with a related call off
order, where services are included and a partial billing plan is assigned.
 Service based revenue recognition e.g. a sales order is delivered in a totally
another time period than the invoice is created and released.

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Revenue Recognition - Best Practice 2 Description of Business Area
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 Time based and billing related revenue recognition e.g. the invoicing has to be
done before revenues may be realized.
This document mainly deals with the non-standard revenue recognition since only for
these the special revenue recognition functionality is relevant. Further in this document
the term ‘revenue recognition’ refers to the use of a revenue recognition method other
than the standard revenue recognition.
2.4 Business Process Specific Information

 The revenue recognition process is included in standard SD processes and is
used in most cases with the billing plan functionality.
 Revenues aren’t posted to the G/L account when releasing the invoice to
accounting.
 With the revenue recognition run (VF44) FI documents are created and the
revenues will be realized. This is possible after the process is initialized

(depending on the revenue recognition method).
 For a background run of VF44 report ZZVF44HN (note 377318) is available.
(valid for < 46C HP 49 and 470 < HP 23)
 With the cancellation of the revenue recognition (VF46) the revenue recognition
posting can be reversed, e.g. if revenues have been realized in error. The
revenue recognition cancellation is not a real cancellation in the sense of a
reverse posting. The balances on the accounts at the creation date of the
cancellation are used as a basis.
 A function of revenue recognition is the grouping and monitoring of revenues in
two additional general ledger accounts, which are:
o unbilled receivables account (U/R account)
o deferred revenues account (D/R account)
You can see in these accounts whether revenue has been realized, but not yet taken into acc
but not yet realized.

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Revenue Recognition - Best Practice 3 Implementing Revenue Recognition
Knowledge Document
3 Implementing Revenue Recognition
3.1 Getting started R/3 SD Revenue Recognition

Required releases and support packages
When you want to start with revenue recognition, the very first step to do is, look at your
system-status!
Don’t start implementing or customizing revenue recognition, when you don’t

have the latest support package for your SAP-release.
Recommended releases and support packages are (as for May 2005):
46C SP49, additional notes from note 813850

470 SP23, additional notes from note 813850
Supported processes in revenue recognition
Before starting with the implementation of revenue recognition functionality, it is

essential to know, which processes are supported by SAP-functionality.
The supported processes and functions are described in the document “Best Practice
for Revenue Recognition”.
This document contains detailed information about:

 Necessary Customizing settings
 Supported processes and scenarios
 Limitations and restrictions placed on the solutions offered
 Recommendations for monitoring the revenue recognition process
 A guide for implementation
You will find a link to the latest version of this document in SAP-note 779365.
Also look at the “prerequisites for revenue recognition” mentioned in SAP-note 782758.

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In order to comply with the latest accounting principles and current financial regulations,
like 'Generally Accepted Accounting Principles' (US-GAAP), 'International Accounting
Standards' (IAS) / 'Financial Reporting Standards' (FRS), as well as the 'Sarbanes-
Oxley Act', SAP provides some general recommendations for customers using Revenue
Recognition in the Sales and Distribution component (SD).
Some information from this note:
 the setup of the function is not only an SD task, but also a FI task
 Revenue Recognition needs to be implemented by SAP-certified SD-and
FI consultants.
 Program modifications in a revenue recognition relevant process are
discouraged because they may have unexpected effects and may result in
an incorrect data stream for FI.
 It is necessary to monitor the Revenue Recognition function monthly, at a
minimum, the results by using the transactions VF47 which provides a
more technical view as VF45 which delivers a transaction view of SD and
FI.

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Starting with customizing
3.1.1.1 Global informations

When you try to start customizing revenue recognition, you will find, that customizing
item for revenue recognition cannot be entered or changed. According to SAP-note
820417 the path on IMG Sales and Distribution -> Basic Functions -> Account
Assignment/Costing -> Revenue Recognition -> Set Revenue Recognition For Item
Categories is not open for any entering or changing of customizing data.
Usage of R/3 SD Revenue Recognition functionality is under a special activation by

SAP (see also SAP-notes 779366 and 605665).
By releasing the SD Revenue Recognition function separately, we want to ensure that
customers who intend to use this function are aware of and agree to the necessary
determining factors and prerequisites.
Despite this special release process, customers are still responsible for setting up, using
and operating the R/3 SD Revenue Recognition function.
3.1.1.2 Presteps
For the setup of revenue recognition processes you have to customize
1) FI accounts and their settings
2) SD item-categories and their settings
3) revenue recognition type on item category level
4) account determination
The following accounts are needed for the representation of the revenue re-cognition
process:
 Revenue account (recognized revenues)
 Receivables account (customer account)
 Revenues to be deferred (deferred revenue account or D/R account)
 Unbilled receivables (unbilled receivables account or U/R account)
For the revenue account and receivables account you can use the accounts that you
used before in the other standard processes. The account of the revenues to be
deferred (in the following called D/R account) and the account of the unbilled
receivables (in the following called U/R account) have to be created as new accounts.
 The U/R account must be different from the D/R account, i.e. different account
numbers must be used. Only this way the posting process of the revenue
recognition can be monitored.

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 An account number is never a revenue account that is used for the accruals
accounts (U/R and D/R account).

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Customizing FI accounts and their settings
3.1.1.3 Unbilled receivable account and deferred revenue account

For the unbilled receivable account and for the deferred revenue account the
following settings in FI must be maintained:
Transaction : FS00
Path: Financial Accounting -> General Ledger Accounting -> G/L
Accounts -> Master Records -> G/L Account Creation and
Processing -> Edit G/L Account (Individual Processing) -> Edit G/L
Account Centrally
On Tab “Type/Description” field “Balance sheet account” (SKA1-XBILK) must be set to

YES.
This indicates that the G/L account is managed as a balance sheet account. Unbilled
receivable and deferred revenue account have to be balance sheet accounts, because
only these accounts and their balances are carried forward at fiscal year-end.

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On Tab “Control data” the following fields have to be fill out:

Field “Only balances in local currency” (SKB1-XSALH) to no *1)

Field “Tax category” (SKB1-MWSKZ) with + (Only output tax allowed) or * (All tax
types allowed) *2)
Field “Posting without tax allowed” (SKB1-XMVNO) to yes *3)
Field “Open item management” (SKB1-XOPVM) to yes *4)
Field “Line item display” (SKB1-XKRES) to yes *5)

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*1) With “no” it Indicates that balances are updated not only in local currency when
users post items to this account. So the revenue recognition processes are able
to post in different currencies.
*2) Possible entries:
Here just “+” or “*” are used.

*3) With “yes” it indicates that the account can still be posted, even if a tax code has
not been entered. In revenue recognition it should be possible to post both,
taxable and non-taxable items, to an account. For example, you would usually
set up a separate tax code for the non-taxable transactions. When taxes are
entered using jurisdiction codes, however, this separate tax code cannot be used
since jurisdiction codes cannot be specified for foreign customers. In this case,
you allow users to post items without tax codes in the corresponding expense
and revenue accounts.
*4) With “yes” it determines that open items are managed for this account. Items
posted to accounts managed on an open item basis are marked as open or
cleared. The balance of these accounts is always equal to the balance of the
open items. Set up accounts with open item management if offsetting entries are
to be assigned to the postings made to these accounts. Postings to these
accounts represent incomplete processes or process-steps.
Be careful when using open item management, because in this case you cannot
use document summarization!
Userexit xxxxxxxxx must be used to set the assignment in the SD invoices.
*5) With “yes” here it indicates that line item display is possible in this account. For
line item display, the system stores an entry per line item in an index table which
contains the link between line item and account.

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On Tab “Create/bank/interest” there is one entry necessary:

Field “Post automatically” (SKB1-INTB) with yes

This mark indicates that this account can only be posted to by the system using account
determination tables. No manual posting is allowed, because manual posting will never
change the revenue recognition tables.

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3.1.1.4 Revenue account

For the revenue account the following settings must be maintained:
On Tab “Type/description”
Set field “P&L statement acct” (SKA1-XPLACCT) to yes.

For revenue accounts you need accounts with type P&L.

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On Tab “Control data” maintain the following fields:

Field “Posting without tax allowed” (SKB1-XMVNO) to yes
Do not select field “Only balances in local crcy” (SKB1-XSALH). Always NO

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SD-Customizing
3.1.1.5 SD item-categories and their settings

Normally when you are working with revenue recognition, you are working with SD
contracts or customer orders, deliveries and invoices.
So you have to customize these documents.
On sales document header level you have to do just the normal customizing for the
sales document types. No additional customizing is necessary for revenue recognition.
On sales item level, you have to do some customizing, when using revenue recognition.
When you want to use a billing plan, you have to customize this in your item categories.
Path: Sales and Distribution -> Sales -> Sales Documents -> Sales Document Item ->
Define Item Categories

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Field “relev. for billing”:

Use “I” for the document item category you want to use with a billing plan.
Field “billing plan type”:
For a billing plan type, choose one of the above types or create your own billing plan
type and the use this one for the item categories. You can create your own billing plan
type in customizing via path Sales and Distribution -> Billing -> Billing Plan -> Define

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Billing Plan Types or transaction OVBI for periodic billing or transaction OVBO for
milestone billing.
3.1.1.6 Customizing revenue recognition type on item category level

You will find this part of customizing via the following path:
Sales and Distribution -> Basic Functions -> Account assignment / Costing ->
Revenue Recognition
Or via transaction: OVEP.
Set Revenue Recognition For Item Categories

Possible entries for the field “Rev. recognition” are:
How to use this revenue recognition category?

Referring to chapter 3 in this document, where the processes are described, the usage
of this category is explained.

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Here a short summary:
Category blank ‘ ‘: see chapter 4.1 used with standard revenue recognition
at time of billing
Category ‘A’: see chapter 4.2 used with timebased revenue
recognition
see chapter 4.6 used with credit/debit memo timebased
revenue recognition with memo request
revenue recognition without memo request
Category ‘B’: see chapter 4.3 used with servicebased revenue
recognition
see chapter 4.4 used with servicebased revenue
recognition in contracts with calloffs
revenue recognition without memo request

recognition in return process with reference to an order
recognition in return process with reference to a contract and
calloff-order
Category ‘D’: see chapter 4.5 used with timebased and billing related
revenue recognition
Category ‘E’: is relevant for customers who use the ‘Industry Solution
Media’. Details are described in the ‘Best Practice IS-M’
Category ‘F’: see chapter 4.7 used with credit/debit memo revenue
recognition with reference to a preceding document

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3.1.1.7 Customizing revenue recognition accrual start date

Selects the start date for the accrual period and is relevant for the revenue recognition
type A.
The accrual start date determines the start of the period in which revenues should be
recognized.
You have the following options:
 Proposal based on contract start date

Revenue recognition proposes the start date of the sales contract for the item as
the accrual start date.
 Proposal based on billing plan start date
Revenue recognition proposes one of the following dates as the accrual start
date:
 In a milestone billing plan, the billing date of the first milestone
 In a periodic billing plan, the earlier of the following dates:
 Billing plan start date
 Start date of first settlement period

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3.1.1.8 Account determination

Next customizing step is the account determination. You will find this item via path
Sales and Distribution -> Basic Functions -> Account Assignment/Costing -> Revenue
Recognition -> Maintain Account Determination or transaction VKOA.
In the SD module, both the revenue account and the account for deferred revenue
amounts must be maintained in the revenue account determination. This occurs in
customizing transaction according the following example:
Assign G/L accounts for revenues and deferred revenues:
 G/L account no. (SAKN1) revenue account

 Provision acc. (SAKN2) D/R account

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Assign account for unbilled receivables:

In customizing transaction OVUR, the account for unbilled receivables (U/R account) is
maintained depending on the reconciliation account and the associated chart of
accounts.
There are two possibilities for the determination of the reconciliation account:
1) The reconciliation account is taken from the customer master record of the
payer.
2) For the billing type assigned to the sales document, the system checks
whether the reconciliation account determination is active. If this is
the case, the system performs a reconciliation account determination
within the revenue recognition and uses the so determined reconciliation
account. (note : 644296)
 Maintain NonBldRec. U/R account

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Revenue Recognition - Best Practice 4 Description of Core Business Processes
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4 Description of Core Business Processes

The illustration of typical core business processes show an overview of the suggestive
process flow based on the selected revenue recognition method. Within the process
flow the separate steps can be done in reverse order, especially the chronological order
of the creation/releasing of the invoice and the posting of the revenues is variable. For
each core business processes using a chosen revenue recognition method two
processes are described to display the different account postings depending on the
sequence. There is no relation to values done and there is no partial delivery, partial
invoicing of partial revenue recognition included. The description is simplified and the
process flow productive landscapes are much more complex.
4.1 Standard Revenue Recognition at time of billing

General Information
 Process 1 is the R/3 standard method for revenue recognition consisting of

revenue recognition at the time of billing.
 Companies use standard revenue recognition, if they want to post revenues in
Financial Accounting, as soon as an invoice is released to accounting.
 No special revenue recognition functionality is used. Revenue recognition
method = ‘ ‘ (blank).

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Business steps overview and process description

Will not be discussed further as this process is the standard billing process with the
standard revenue recognition at the time of billing.
Critical functions
Nothing.
Variations of the process
Nothing.
Additional important information
Nothing.

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4.2 Time based revenue recognition (‘A’)
General Information
 Using time-related revenue recognition, it is possible to carry out recognition over

a specific period of time. An example of this is revenue recognition for the length
of a service or rental contract. The proportions for the periods are equal.
 Time-related revenue recognition can be used for single billing document items
without billing plan functionality, with periodic billing plans and with milestone
billing plans.
 Revenue recognition method = ‘A’.
 Process 2 characterizes that transaction VF44 is used before invoice.
Process 3 demonstrates the process when the invoice is posted before
transaction VF44.

4.2.1.1 Process 2 – time based with VF44 as first
As a first step in the process the sales contract is created, which can contain a billing
plan. This sales document contains the line items, which have to be billed as well as

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the relevant conditions. The saving of this document triggers the creation of control lines
(VBREVK) and the revenue lines (VBREVE) for each period. With time-related revenue
recognition the recognition is carried out between a specific start and end date in equal
parts. The start and end dates are determined on item level in the sales document. Here
the billing plan dates or the contract data dates will be used. The number of periods
between these dates is determined using the financial calendar for the company code
assigned to the document. According to the number of periods and the amount to be
billed, the revenue lines are calculated.
Since the revenue recognition is now initialized, it is possible to realize the revenue
using transaction VF44. This triggers the update of the control lines with the realized
value and the new balance and the update of the revenue lines. In FI an accounting
document is automatically created, which posts on the reconciliation account ‘unbilled
revenues’ and on the revenue account.
When the invoice is created and released for accounting, another accounting document
is created, which balances (or reduces) the reconciliation account and posts on the
receivables account. The revenue recognition tables are also updated by this step. A
new reference line is created, containing information of the invoice, and the control lines
are updated as well.
If only a partial billing took place or was realized, the steps following the order creation
may be repeated for further periods until the sales document is completed. In such
cases another revenue account (deferred account) can be posted.
4.2.1.2 Process 3 – time based with invoice as first

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As a first step in the process the sales contract is created, which can contain a billing
plan. This sales document contains the line items, which have to be billed as well as
the relevant conditions. The saving of this document triggers the creation of control lines
(VBREVK) and the revenue lines (VBREVE) for each period. With time-related revenue
recognition the recognition is carried out between a specific start and end date in equal
parts. The start and end dates are determined on item level in the sales document. Here
the billing plan dates or the contract data dates will be used. The number of periods
between these dates is determined using the financial calendar for the company code
assigned to the document. According to the number of periods and the amount to be
billed, the revenue lines are calculated.
When the invoice is first created and released to accounting, an accounting document is
created. It posts to a different reconciliation account called ‘deferred revenues’ and to
the receivables account. This event also triggers the update of the control lines with the
realized value and the new balance and creates the reference lines.
Now transaction VF44 runs. This triggers the update of the control lines and the update
of the revenue lines. Also in FI, an accounting document is automatically created, which
posts on the reconciliation account ‘deferred revenues’ and on the revenue account.
If only a partial billing took place or was realized, the steps following the order creation
may be repeated for further periods until the sales document is completed. In such
cases another revenue account (unbilled receivable account) can be posted.
Critical functions
 A contract will be used without contract data and without billing plan. As a
consequence no VBREVE can be created, as there is no start and no end date.
 A condition is added manually in the invoice, not in the contract/order, and the
new condition is using separate accounts. As a consequence the posted values
from VF44 would differ from the values posted by the billing document. The
invoice cannot be released to accounting, the error message F5 702 would
appear. Note 496721 explain the solution: the added condition has to be
classified in a way that it is not relevant for revenue recognition.
 Instead of a contract, a sales order can be used as sales document in this
process, which then replaces the contract. In this case a billing plan has to be
used, if the sales order contains no contract data. This triggers the same follow
on steps.
 Additional steps of the process can include the delivery of items and posting
goods issue which do not affect the revenue recognition process.
Nothing.
Nothing.

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4.3 Service based revenue recognition (‘B’)

General Information
 Using service-related revenue recognition, you can carry out recognition on the
basis of a specific event. An example of this is revenue recognition for a service
contract, where services are included.
 Revenue recognition method = ‘B’.
 Process 4 demonstrates the process, when transaction VF44 is run before
invoicing.
Process 5 demonstrates the process, when the invoice is posted before
transaction VF44.
4.3.1.1 Process 4 – service based with VF44 as first

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As a first step in the process the sales order or sales contract is created. This sales
document contains the line items, which have to be billed as well as the relevant
conditions. The saving of this document triggers the creation of the control lines
(VBREVK) only. No revenue lines are created at this stage.
The next process step consists of the creation of the delivery with reference to the
order/contract, the line items are copied into this document. The goods are picked either
with lean warehouse management or with full warehouse management including
transfer orders. When the goods have left the company stock, goods issue is posted.
This triggers the creation of the revenue lines (VBREVE) in service based revenue
recognition according to the document data.
It is now possible to realize the revenue using transaction VF44. This triggers the
update of the control lines with the realized value, a new balance, and the update of the
revenue lines. In FI an accounting document is automatically created which posts to the
reconciliation account ‘unbilled receivables’ and to the revenue account.
When the invoice is created and released to accounting, another accounting document
is created which balances (or reduces) the reconciliation account and posts to the
new reference line is created containing information from the invoice, the control lines
will also be updated.
4.3.1.2 Process 5 – service based with invoice as first
As a first step in the process the sales order or sales contract is created. This sales
document contains the line items, which have to be billed, as well as the relevant
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conditions. The saving of this document triggers the creation of the control lines
(VBREVK) only. No revenue lines are created at this stage.
order/contract, the line items are copied into this document. The goods are picked either
with lean warehouse management or with full warehouse management including
transfer orders. When the goods have left the company stock, goods issue is posted.
Now the invoice is created and released to accounting. An accounting document is
created, which posts to the reconciliation account ‘deferred revenue’ and to the
receivables account. The revenue recognition tables are updated by this step. A new
reference line is created containing information from the invoice, the control lines will
also be updated.
After this step transaction VF44 is used. This triggers the update of the control lines and
the update of the revenue lines. In FI an accounting document is automatically created,
which posts to the reconciliation account ‘deferred revenue’ and to the revenue account.
Critical functions
 If the order item is relevant for ‘delivery-related-invoicing’ (FKREL = A) and there

is a under/over delivery (there is more ordered than delivered/ there is more
delivered than ordered) the value, which is delivered and invoiced, has to be
considered as revenues. It is necessary to adjust the quantity of the order
according to the delivery quantity.
 If the order item is relevant for ‘order-related-invoicing’ (FKREL = B or I) and
there is a under/over delivery (there is more invoiced than delivered/ there is
more delivered than invoiced) the value, which is ordered and invoiced, has to be
considered as revenues. It is necessary to adjust the revenues and to complete
the order process. This is done by the system as soon as a reason for rejection
is set.
 If there are changes of condition values or time data in the sales order, an
adjustment is necessary for the revenues. The revenue lines have to be updated.
The adjustment is only done, if there wasn’t an invoice created and if there was a
complete delivery (vbup-lfsta = C).
The adjustments in case of under/over delivery, price or time changes as
described in order processing, are not possible for contracts using performance
based revenue recognition. The adjustment process for contracts is not
supported for < 46C HP 48 and 470 < HP 22)

Nothing.

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Nothing.

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4.4 Service based revenue recognition (‘B’) contract with call off
General Information
 Using service-related revenue recognition you can carry out recognition on the
basis of a specific event. An example of this is revenue recognition for a contract
with a call off order while the contract item is invoiced and the linked call off order
item is delivered.
 Revenue recognition method = ‘B’ for the contract and call off order.
 Process 6 demonstrates the process, when transaction VF44 is run before
invoicing.
Process 7 demonstrates the process, when the invoice is posted before
transaction VF44.
4.4.1.1 Process 6 – service based with VF44 as first
The first step in this process is the creation of the sales contract, which may contain a
billing plan. This contract creation generates control lines in table VBREVK. In the
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second step a call off order is generated with reference to the contract and a delivery
may have been created with reference to the call off order.
The next process step is that the goods are picked either with lean warehouse
management or with full warehouse management including transfer orders. When the
goods have left the company stock, goods issue will be posted. This triggers the
creation of the revenue lines (VBREVE).
In the subsequent step, when transaction VF44 is run, an update of the control and
revenue lines is generated. Additionally an accounting document is automatically
created in FI, which posts to the unbilled account.
After the invoice is created with reference to the contract and released to accounting,
the reference lines will be created and the control lines will be updated. The created FI
document posts to the unbilled account.
4.4.1.2 Process 7 – service based with invoice as first

The first step in this process is the creation of the sales contract, which may contain a
billing plan. This contract creation generates control lines in table VBREVK. In a second
step a call off order is generated with reference to the contract and a delivery may have
been created with reference to the call off order.
The next process step is that the goods are picked either with lean warehouse
management or with full warehouse management including transfer orders. When the

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goods have left the company stock, goods issue is posted. This triggers the creation of
the revenue lines (VBREVE).
In the subsequent step an invoice is created and released to accounting, reference lines
(VBREVR) will be created and control lines (VBREVK) will be updated. Additionally an
accounting document is automatically created in FI, which posts to the deferred
account.
While transaction VF44 runs in the next step, an update of the control and revenue lines
is generated. Additionally an accounting document is automatically created in FI, which
posts to the deferred account.
Critical functions
 If terms are added manually in the call-off order, there must be a link to a contract
item otherwise the call-off order items are handled separately.
 Changes of the revenue recognition accounts (D/R account / U/R account) are
not supported.
 If there is an over/under delivery of the call-off order items, the process should be
completed. There is no clearing of the balance on the clearing account. The
difference between billed and recognized value has to be posted by a credit
memo. The creation of a credit memo in reference to a credit memo request
doesn’t lead to the clearing of the balance and therefore the credit memo must be
created in reference to the billing document.
 In case of changes of condition values or time data in the contract / call-off order
an adjustment for the revenue is only possible, if there is no invoice created.
Before an invoice is created, the price and time changes have to be done
correspondingly in the contract item and the related call-off order item.
In accordance with the above described process, where the invoice is related to the
contract and the call off order is to be delivered, two other scenarios exist:
 The call off order will be invoiced and delivered:
When the call off order is created with reference to the contract, the saving of the
call off order creates control lines (VBREVK). After the related delivery has
posted the goods issue, revenue lines (VBREVE) are created.
Important remark: The invoice has to be created in reference to the call off order
(order-related invoicing) and NOT in reference to the delivery (delivery-related
invoicing).
 The contract will be invoiced and the call off order will not be delivered:
While the contract is created, control lines are created in table VBREVK and
during saving of the call off order revenue lines are generated in table VBREVE.

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In order to implement the three scenarios, the following customizing settings must be
configured in the sales document types:
 The contract will be invoiced and the call off order will be delivered:
The billing relevance of the contract item category should be ‘B’ or ‘I’, while the
billing relevance of the call off order item category should be ‘ ‘. The revenue
recognition relevance of the contract and the call off order item categories should
be set to ‘B’.
 The call of order will be invoiced and delivered:
The item category of the contract should be customized with revenue recognition
relevance ‘ ‘, the item category of the call off order with ‘B’. The billing relevance
of the contract item category should be ‘ ‘, while the billing relevance of the call
off order item category should be ‘B’.
 The contract will be invoiced and the call off order will not be delivered:
billing relevance of the call off order item category should be ‘ ‘. The revenue
recognition relevance of the contract and the call off order item categories should
be set to ‘B’.

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4.5 Time based and billing related revenue recognition (‘D’)
General Information
 Using time based and billing related revenue recognition, you can carry out
recognition on the basis of an invoice over a specific period of time. An example
of this is revenue recognition for the length of a service or rental contract after the
invoice is created and released. The proportions for the periods are equal.
 Revenue recognition method = ‘D’.
 Process 8 will be initialized at the point in time when the billing document is
released to accounting. Afterwards transaction VF44 is run.

The contract or the sales order will be created. Then the invoice will be created.
After the invoice was released to accounting all the Revenue Recognition tables are

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filled. The invoice posts to the deferred account and to the receivable account. The
reference lines, the control lines and the revenue lines are now available for the
Revenue Recognition Process.
update of the control lines with the realized value, the new balance and the update of
the revenue lines. In FI, an accounting document is automatically created which posts to
the reconciliation account ‘deferred revenues’ and on the revenue account.
Critical functions
Nothing.

Additional steps of the process can include the delivery of items and post goods issue,
which do not affect the revenue recognition process.
The cancellation of the invoice using transaction VF11 is starting its own revenue
recognition process. The releasing of the invoice cancellation document triggers the
creation of separate control, revenue and reference lines. The revenue recognition
cancellation process has no reference to the original revenue recognition process.

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4.6 Time based revenue recognition in credit/debit memo

processing with a credit/debit memo request (‘A’)
General Information
 Using time-related revenue recognition in a credit/debit memo processing, it is

possible to carry out recognition over a specific period of time. An example of this
is revenue recognition for the length of a credit/debit memo request. The
proportions for the periods are equal. The credit/debit memo request is created
in reference to a contract, order or invoice.
 The credit/debit memo process with a credit/debit memo request sets up its own
revenue recognition tables.
 The credit memo process has the opposite posting logic to the billing. The debit
memo process has the same posting logic to the billing, when posting to the
reconciliation accounts.
 When creating and transferring a credit memo to accounting, the system checks,
whether a balance exists on the deferred revenue (D/R) account, otherwise the
posting is made to the unbilled receivables (U/R) account.
 Revenue recognition method = ‘A’.
 Process 9 demonstrates the credit memo processing, when transaction VF44 is
ran before creation of the credit memo.
Process 10 demonstrates the credit memo processing, when the credit memo is
posted before transaction VF44 is ran.

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4.6.1.1 Process 9 – time based with VF44 as first
As a first step in the process the credit/debit memo request is created, which may
contain a billing plan. This sales document contains the line items, which have to be
billed as well as the relevant conditions. The saving of this document triggers the
creation of control lines (VBREVK) and the revenue lines (VBREVE) for each period.
With time-related revenue recognition the recognition is carried out between a specific
start and end date in equal parts. The start and end dates are determined on item level
in the sales document. Here the billing plan dates or the contract data dates will be
used. The number of periods between these dates is determined using the financial
calendar for the company code assigned to the document. The revenue lines are
calculated based on the number of periods and the amount to be billed.
Since the revenue recognition is now initialized, it is possible to realize the revenue
using transaction VF44. This triggers the update of the control lines with the realized
value, the new balance and the update of the revenue lines.
In case of the credit memo process, an accounting document is automatically created,
which posts to the accruals account ‘deferred revenues’ and to the revenue account.
In case of the debit memo process, an accounting document is automatically created,
which posts to the accruals account ‘unbilled receivables’ and to the revenue account.
When the invoice is created and released to accounting, another accounting document
is created, which balances (or reduces) the accruals account and posts to the

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new reference line is created, containing information from the invoice and the control
lines are also updated.
As a result, the opposite accruals accounts will be used for the credit memo process
than are used for the debit memo process (invoices and debit memos have the same
posting logic in accounting).
4.6.1.2 Process 10 – time based with invoice as first

As a first step in the process the credit/debit memo request is created, which can
contain a billing plan. This sales document contains the line items, which have to be
billed as well as the relevant conditions. The saving of this document triggers the
creation of control lines (VBREVK) and the revenue lines (VBREVE) for each period.
With time-related revenue recognition the recognition is carried out between a specific
start and end date in equal parts. The start and end dates are determined on item level
in the sales document. Here the billing plan dates or the contract data dates will be
used. The number of periods between these dates is determined using the financial
calendar for the company code assigned to the document. According to the number of
periods and the amount to be billed, the revenue lines are calculated.
When the invoice is created and released to accounting a different accruals account is
posted together with the receivables account in the accounting documents.
In case of the credit memo process the accruals account is called ‘unbilled receivables’
account.
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In case of the debit memo process the accruals account is called ‘deferred revenues’
account.
Then transaction VF44 runs. This triggers the update of the control lines with the
realized value and the new balance and updates the revenue lines as well.
As a result the opposite accruals accounts will be used for the credit memo process
than for the debit memo process (invoices and debit memos have the same posting
logic in accounting).
Critical functions
Nothing.

The credit/debit memo processing with a credit/debit memo request can also be used as
standalone process. It triggers the same steps as described previously.
Nothing.

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4.7 Credit/debit memo revenue recognition with reference to

preceding document (‘F’)
General Information
 Using credit/debit memo revenue recognition with reference to a preceding

document, it is possible to carry out revenue recognition over a specific period of
time equal to the original process. An example of this is revenue recognition for
the length of a credit/debit memo request. The proportions for the periods are
equal. The credit/debit memo request is created request in reference to a
contract, order or invoice.
 No new revenue recognition tables will be created. The credit/debit memo
process updates the revenue recognition tables of the preceding sales process.
 The revenue recognition method = ‘F’.
It is implemented with note 447513 (SAPKH45B50, SAPKH46B38,
SAPKH46C28).based revenue recognition type ‘A’

For preceding sales documents with type ‘B’ the note 839596 is relevant
 Process 11 consider only type ‘A’ and will be initialized at the point in time, when
the credit memo is released to accounting. Afterwards transaction VF44 is ran.

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The credit/debit memo process will be created with reference to a preceding sales
document, and with revenue recognition type ‘F’ it updates the revenue recognition
tables of the preceding sales process.
When this type is set for the credit/debit memo request, the system checks whether the
reference document is relevant for 'time-related revenue recognition' (method 'A'). In
this case the subsequent credit/debit memo generates reference lines (VBREVR)
corresponding to the reference document.
The posting to the accounts depends on whether there is a balance on the D/R or the
U/R account (revenue recognition run is done and/or invoice is released to accounting
in the original process).
It is now possible to realize the corrected revenue using transaction VF44. This triggers
the update of the control lines and the update of the revenue lines. In FI an accounting
document is automatically created which posts to the accruals account of either the D/R
or U/R and to the revenue account.

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Critical functions
Nothing.
Valid for 46C < SP49 and 470 < SP22:

For updating the revenue recognition tables (VBREVK and VBREVE) of the preceding
sales process (after the credit/debit memo was created), it is necessary to do a manual
update using VA02/VA42 or to run report ZZ_SALES_DOC_CHANGE from note

385149. This update will not be executed automatically.
In detail: In the VBREVK the field ACC_VALUE and in VBREVE the field WRBTR have
to be updated. If revenues have already been posted, the system must enable a
correction posting (adjustment line).
Valid for 46C > SP 49 and 470 > SP22:

For the update you can use the VF42 and report SDRRAV54 (description see note
780993)

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4.8 Time based or service based revenue recognition recognition

in credit/debit memo processing without a credit/debit memo
request (‘A’ or ‘B’)
General Information
 Using time-related revenue recognition in a credit/debit memo processing, it is

possible to carry out recognition over a specific period of time equal to the
original process. Using service-related revenue recognition in a credit/debit
memo processing, it is possible to carry out recognition on the basis of a specific
event equal to the original process. The credit/debit memo is created in reference
to an invoice and there is no credit/debit memo request.
 No new revenue recognition tables will be created. The credit/debit memo
process updates the revenue recognition tables of the preceding sales process.
 The revenue recognition relevance is transferred from the previous document.
Revenue recognition method = ‘A’ or ’B’.
 Process 12 will be initialized at the point in time when the credit memo is
released to accounting. Afterwards transaction VF44 is ran.

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If a credit memo/debit memo is created and the reference document is the billing
document, the credit memo/debit memo updates the revenue recognition tables of the
preceding sales process.
Therefore the posting to the accounts depends on whether there is a balance on the
D/R or the U/R account (revenue recognition run is run and/or invoice is released to
accounting).
Critical functions
 Using revenue recognition method ‘B’ in a credit/debit memo created with

reference to the preceding invoice in a contract process is not supported. This
does not apply to order processes.

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When using Revenue recognition method = ‘D’, the credit memo/debit memo doesn’t
update the existing revenue recognition tables of the preceding sales process. The
credit memo/debit memo is starting its own revenue recognition process. The release of
the credit memo/debit memo document triggers the creation of separate control,
revenue and reference lines.
For updating the revenue recognition tables (VBREVK and VBREVE) of the preceding
order process (after the credit/debit memo was created) it is necessary to do a manual
update using va02/va42 OR to run report ZZ_SALES_DOC_CHANGE from note
385149. This update will not be executed automatically.
In detail: In the VBREVK the field ACC_VALUE and in the VBREVE the field WRBTR
have to be updated. If revenues have already been posted, the system must enable a
correction posting (adjustment line).

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4.9 Service based revenue recognition in return processing with

reference to an order (‘B’)
General Information
 Using service-related revenue recognition in a return processing can carry out

recognition on the basis of a specific event equal to the original process. The
return order is created in reference to an order after the order was delivered.
The return order is invoiced with a credit memo.
 No new revenue recognition tables will be created. The return process updates
the revenue recognition tables of the preceding sales process.
 Process 13 demonstrates the process when transaction VF44 is ran before
creation of the credit memo.
Process 14 demonstrates the process when the credit memo is posted before
transaction VF44 is run.

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4.9.1.1 Process 13 – service based return processing with reference to an
order with VF44 as first
The return process will be created with reference to a preceding sales document and
with revenue recognition type ‘B’. It updates the revenue recognition tables of the
As a first step the return sales order is created with reference to the sales order. This
sales document contains the line items, which have to be credit as well as the relevant
conditions. The saving of this document triggers not the update of the control lines
(VBREVK). No revenue lines are created at this stage.
return order; the line items are copied into this document. The goods receipt is posted.
update of the control lines with the realized value, a new balance, and the update of the
revenue lines. In FI an accounting document is automatically created, which posts to the
reconciliation account D/R or U/R and to the revenue account.
The posting to the accounts depends on whether there is a balance on the D/R or the
U/R account (revenue recognition run is done and/or invoice is released to accounting
in the original process).

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When credit memo is created and released to accounting, another accounting
document is created, which balances (or reduces) the reconciliation account and posts
to the receivables account. The revenue recognition tables are also updated by this
step. A new reference line is created containing information from the credit memo, the
control lines will also be updated.
4.9.1.2 Process 14 – service based return processing with reference to an

order with invoice as first
As a first step the return sales order is created with reference to the sales order. This
sales document contains the line items, which have to be credit as well as the relevant
conditions. The saving of this document triggers not the update of the control lines
(VBREVK). No revenue lines are created at this stage

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In the subsequent step a credit memo is created with reference to the return sales order
and released to accounting, reference lines (VBREVR) will be created and control lines
(VBREVK) will be updated. Additionally, an accounting document is automatically
created in FI, which posts to the D/R or U/R account
D/R or the U/R account (revenue recognition is run and/or invoice is released to
accounting).
While transaction VF44 runs in the next step, an update of the control and revenue lines
is generated. Additionally an accounting document is automatically created in FI.
Critical functions


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4.10 Service based revenue recognition in return processing with

reference to a contract and call off order (‘B’)
General Information
 Using service-related revenue recognition in a return processing with reference to

a contract / call off order can carry out recognition on the basis of a specific event
equal to the original process. In the original process the contract item is invoiced
and the linked call off order item is delivered. The return order is created in
reference to the call off order after the call off order was delivered. There won’t
be a credit memo for the return process due to the call off order isn’t billing
relevant.
 No new revenue recognition tables will be created. The return process updates
the revenue recognition tables of the preceding sales process.
 Process 15 will be initialized at the point in time when the goods issue posting is
done for the return order. Afterwards transaction VF44 is run.

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As a first step the return sales order is created with reference to the call off order. This
sales document contains the line items, which have not to be credit. In this process the
sales contract is relevant for billing. The saving of this document triggers not the update
of the control lines (VBREVK). No revenue lines are created at this stage.
Afterwards it is possible to run transaction VF44, an update of the control and revenue
lines from the contract is generated. Additionally an accounting document is
automatically created in FI, which posts to the D/R or U/R account
D/R or the U/R account (revenue recognition is run and/or invoice is released to
accounting).
Critical functions
Nothing
In accordance with the above process, where the invoice is related to the contract and
the call off order is to be delivered, another scenario exists:
 The call off order will be invoiced and delivered:
When the call off order is created with reference to the contract, the saving of the
call off order creates control lines (VBREVK). After the related delivery has
posted the goods issue, revenue lines (VBREVE) are created.
Important remark: The invoice has to be created in reference to the call off
order (order-related invoicing) and NOT in reference to the delivery (delivery-
related invoicing).
In the following return order processing the return order will be create with
reference to the call off order. The saving of the return order creates control lines
(VBREVK) with the document number of the return order. There is NO link
between the call of order and the return process. Also the return delivery and the
return credit memo create their entries with the number of the return order.

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In order to implement the two scenarios, the following customizing settings must be
configured in the sales document types:
 The contract will be invoiced and the call off order will be delivered:
billing relevance of the call off order and return order item category should be ‘ ‘.
The revenue recognition relevance of the contract / call off order / return order
item categories should be set to ‘B’.
 The call of order will be invoiced and delivered:
The item category of the contract should be customized with revenue recognition
relevance ‘ ‘, the item category of the call off order and the return order with ‘B’.
The billing relevance of the contract item category should be ‘ ‘, while the billing
relevance of the call off order and the return order item category should be ‘B’.

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Revenue Recognition - Best Practice 5 Processes currently not supported
Knowledge Document
5 Processes currently not supported

 Revenue recognition for the internal billing in case of Cross Company
processing.
 Revenue recognition for Taxes.
 Revenue recognition in Scheduling Agreements.
 Revenue recognition for Third Party Processing.
 Revenue recognition in Down Payments.
 Revenue recognition in proof of delivery (POD) process.
 Revenue recognition in combination with treasury hedging functionality.
 Changing of revenue recognition accounts before note 568227 was implemented
(important: restrictions in note 568227 have to be considered).

 Changing of document currency in the order/contract after invoicing/revenue
recognition.
 Standard process for migration of revenue recognition data from a former system
to SAP R/3. Every migration is individual for every customer.
 IS-OIL processes with revenue recognition.
 CRM with revenue recognition.

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Revenue Recognition - Best Practice 6 Monitoring of the revenue recognition data
Knowledge Document
6 Monitoring of the revenue recognition data
6.1 Monitoring aspects

When monitoring the revenue recognition data, there are two parts of technically
monitor this data and documents:
 FI-monitoring
 SD-monitoring
The next question is, why is an accurate monitoring that important? It‘s the first time that
SAP provides a functionality, which doesn‘t post the revenues directly with the billing
document, but distributes the realisation of revenues over a certain range of periods.
That means, there is a decoupling of billing document and revenues posting in FI

concerning both, the time dimension as well as possible split of the revenue amounts.
An accurate monitoring ensures, that despite the mentioned decoupling finally those
revenues are realised, which are billed to the customer.

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6.2 FI-Monitoring
Check Account Balances
In order to monitor the revenue recognition process, the first step is to check whether
there are balances on the accrual accounts or not. To display balances on accounts use
transaction FS10N.

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If detailed information is required, a drill-down to line item display is possible.

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Alternatively transaction FBL3N can be used in order to show the line items of an
accrual account directly
If open item management is used only the line items respectively the sales documents
can be displayed which cause the balance on the account
Reconcile FI and SD Values
If balances are determined on the accrual accounts, they can be reconciled with the
revenue recognition data in SD on an aggregated level. You can use transaction VF48
to compare the FI and SD values created by the billing process as well as by the
revenue recognition run.
The reconciliation can be done for a certain range of periods.
In order to get an overview what happened in total with a sales document, the document
flow can be used first. Use to VA02/VA42 or VA03/VA43 to view the document flow.
A more value-oriented view is provided by the transaction VF45 from the sales
perspective and FBL3N from the FI perspective. VF45 displays the deferred revenues,

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the unbilled receivables, the billed and the realized amounts on the level of a sales
document item.
FBL3N can be used to show the relevant FI postings related to a revenue recognition
sales document using the assignment field as a selection parameter. The results of both
views should fit together.
Automatic Clearing of Accrual Accounts
In order to monitor the accrual accounts effectively, it is recommended to use the

automatic clearing process in FI with transaction F.13.
Prerequisites are:
(1) Activate open item management in the master data of the accrual accounts (see
customizing in chapter 9).
Please note:
If you haven‘t yet activated open item management, create new accounts and do
not change the open item management flag for an existing, already in use
account.
(2) As a basis for the automatic clearing of the open items the field ‚Assignment‘has
to be maintained in the customizing transaction ‚Prepare Automatic Clearing‘.

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(3) The standard revenue recognition fills the assignment field in the FI document in
dependence from the revenue recognition type :
revenue recognition type ‘A’: BSEG-ZUONR sales number and item number
revenue recognition type ‘B’: BSEG-ZUONR sales number and item number
revenue recognition type ‘D' BSEG-ZUONR invoice number and item
number
To enable an automatic clearing, the billing run has to fill this field in the same
matter. Therefore an SD user exit has to be implemented (SAP enhancement
SDVFX004)

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6.3 SD-Monitoring with VF45

VF45 Overview
The transaction VF45 is a more value-oriented view from the sales perspective. The
transaction displays the deferred revenues, the unbilled receivables, the billed and the
realized amounts on the level of a sales document item.
The report created by this transaction contains detailed information at SD document

item level:
 posted revenues
 invoiced values
 balances on unbilled/deferred accounts
 Status of the process

 All related follow-on documents
There are some restrictions when using transaction VF45.

 always use the revised version of VF45 as distributed in note 787174,
because the older versions
o do not display the costs (VPRS)
o have no direct link to the SD and FI documents involved
o don’t have sort, filter, subtotal, display or hide additional fields
 Transaction VF45 shows for SD documents, for which a revenue
cancellation was posted via VF46, both, a balance on the account for not
invoiced receivables and also on the account for deferred revenue amounts.
This display is incorrect, the posting are correct. See note 777118 for
explanation

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Selection criterias of VF45

There is just one mandatory field in VF45, the field “sales document”.
The other fields can be used to increase the number of document to be analysed.
 Company code
 Sales document type
 Sales document item
 Sold-to party

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As a result you will get the following report:

From this report you can reach the follow-on document by double-click.

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6.4 SD-Monitoring with VF47

VF47 Overview
The transaction VF47 is a central point in the early stage of analysis the Revenue
Recognition on a customer’s system. If a sales document contains items relevant for
revenue recognition, various errors may occur during the processing of items.
The report of VF47 shows inconsistencies between the revenue recognition tables
VBREVK, VBREVE and VBREVR and the appropriate sales documents. Nethertheless
VF47 is a rather technical view on the revenue recognition tables.
Sales-, billing- and FI-documents can be taken into account to search for
inconsistencies beyond the revenue tables.
VF47 should be scheduled as a frequent batch process. Run VF47 every week, at least
once in a month to be sure that there are no problems or errors in your revenue
recognition data. For an analysis this report should not run in update mode (check box
„Test Run Without Update“ has to be on)
VF47 selection criteria
When starting VF47, you have to fill out a full screen of selection criteria. In the following
text the fields will be described.
company code
sales document type
sales document number mandatory entry. Enter the sales documents,
you want to analyse.
item number item numbers of the sales document

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General Data, Packaging
Number of lines within a package

accessing database on package level
max. number of control lines
Check types:
Only check current Documents:

 The systems only checks lines that have not been completed yet. This means
that only those control lines are checked that do not have status ‘C’
(VBREVK- RRSTA)
Check Reference Lines:
 If this flag is set, the system checks whether all items relevant for revenue
recognition from the relevant billing documents have an entry in the reference
table (VBREVR). Technically, the system reconciles the document flow with the
reference table
Docs From:
 It is possible that not all billing documents may be used for a check after a
migration. For example, this can occur if current contracts were copied from a
preceding system. When you enter a date here, the system ignores all billing
documents that were created before this time.
Incl. FI:
 If this flag is set, the system attempts in addition to read the FI documents of
the billing documents in order to simulate non-existing reference lines
(VBREVR) and to include them in the calculation of the control lines. Thus this
analysis program can determine control lines from the detail lines even if
reference lines are missing and then compare them with the control lines of
the database.

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Compr. :
 If also the FI documents for the billing documents are read, remember that the
billing document and the FI document do not have to match completely. This is
because the individual posting items can be summarized (compressed) in
financial accounting. For this case, this flag must be set. The data required for
simulating the missing reference lines is copied from the billing document.
However, this only occurs if the billing document was posted to 'deferred
revenues' or' non-billed receivables' only. If both accounts are involved, the
reference lines cannot be simulated. This flag is not set by default. The system
therefore attempts to link the billing document with the generated FI document.
The system assumes that the billing items have generated posting items in
chronological order. If this is not the case, the reference lines cannot be
simulated here either.
Check Control Line Status:

 This flag is set by default. It ensures that the system also reads the sales
document data in order to check whether the status of the control lines is correct.
This is necessary because both the reason for rejection on item level and the
billing block on header and item level affect the control line status. With this
information, the system determines the status on the basis of the detail lines and
then compares it with the status of the respective control lines.
Check Total Amount :

 If you set this flag, the system also reads the sales document types (if it has not
done so yet) in order to compare the net item value (VBAP-NETWR) with the total
accrued value of the control lines (VBREVK-ACC_VALUE).
Read Revenue Lines SD:

 If you set this flag, the system is forced to always use the revenue lines from the
revenue table (VBREVE) when determining the simulated control lines. Thus,
balances and posted revenues of the 'new' control lines are based on the data
updated in SD.
Read Revenue Lines FI:

 If you set this flag, the system is forced to always use the revenues from the FI
documents when determining the simulated control lines. Thus, balances and
posted revenues of the 'new' control lines are based on the data updated in FI.
The relevant FI documents are identified via the assignment number
‘Incl. Collective Run No:’

o Generally, the FI documents are generated on sales document level
(BKPF-AWKEY) during the revenue recognition (VF44). However, you can
carry out the revenue recognition (VF44) on collective processing level as

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well. In this case, the FI document does not get the sales document
number as a reference number, but the collective number. That is, if the FI
documents are generated on collective processing level, you must set this
flag in order to find these FI documents. This may cause a slight
performance loss.
Message at doc. level:

 If you set this flag, the system does execute all checks selected, but the log is
output on the basis of the sales document level. The system issues error
messages only once per document although the errors may occur more often.
Only docs with error messages:
 Sales documents that do not have any errors are indicated with a green
checkmark in the log. If you set this flag, the system no longer displays these
correct sales document numbers in the log, but only the incorrect ones with their
corresponding error messages.
The report is able to make changes on the database. The scope of these corrections is
defined by the following selection options. That is, if you want to carry out a correction,
you must select at least one of these selection options. In addition, you must deselect
the 'Test Run without Update' flag
Change control lines:

 If you set this flag, the system overwrites the control lines that can be corrected.
This means that the control lines (VBREVK) were redetermined via the revenue
lines (VBREVE) and the reference lines (VBREVR).
Also for Currency change SD/FI:

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o If you set this flag, the system overwrites the control lines although there
are different currencies in the control lines and existing revenue
documents.
Delete control lines:

 If you set this flag, the system deletes those control lines from the database that
have neither revenue lines nor reference lines.
Create reference lines:

 If you set this flag, the report attempts to regenerate missing reference lines
(VBREVR). The basis for this is either the respective billing document or the FI
document generated from the billing document.
Create revenue lines:

 If you set this flag, the report generates revenue lines (VBREVE) if it detects
balances on both clearing accounts (E16). In this case, the report always
generates two revenue lines. Both lines have the same revenue value (VBREVE-
WRBTR) with one value being positive and the other one being negative. The first
line gets status (VBREVE-RRSTA) 'A' (to be recognized), the second gets status
'C' (recognized).
‘Posting period:’
 Generally, the system determines a posting period for the new revenue lines to be
created. This posting period is always the first posting period (descending sort
order) of a sales document that no longer contains revenues to be recognized,
that is, all revenue lines of this sales document that concern the determined
posting period have status 'C' (VBREVE-RRSTA ='C'). However, if you want to
create revenue lines for a certain posting period, you can specify a period here.
This must be done in the 'YYYYPPP' format where 'Y' represents the year and 'P'
the period.

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VF47 Error categories
6.4.1.1 Account determination errors:
E01 Missing Account for 'Restricted Revenues' in Control Lines: SAKRR.

E02 Missing Account for 'Non-Billed Requests' in Control Lines: SAKRRK
E03 No Accounts Available in Control Lines.
E05 Missing Revenue Account in Revenue Lines: SAKRV
E06 Missing Account for 'Restricted Revenues' in Revenue Lines: SAKDR
E07 Missing Account for 'Non-Billed Requests' in Revenue Lines: SAKUR
E08 Missing Account for 'Restricted Revenues' in Reference Lines: SAKRR.
E09 Missing Account for 'Non-Billed Requests' in Reference Lines: SAKRRK.
6.4.1.2 Inconsistencies between VBREVK / VBREVE/ VBREVR

E04 No Control Lines Found.
E14 No Detail Lines Available, although Time-Related Revenue Recognition
E17 No Reference Lines Available for Billing Document in Table VBREVR.
6.4.1.3 Incorrect values / balances
E10 Differences in Total Accrual/Deferral Amount:

E11 Differences in Balance: WRBTR.
E12 Differences in Recognised Revenues: RVAMT.
E15 Control Lines with Balance for 'Restricted Revenues' and for 'Non-Billed
Requests'.
E16 Detail Lines have Determined Balance for 'Restricted Revenues' and for
'Non-billed Requests'.
E18 Total Amount Difference for Control Lines and Sales Document Item:
E24 Total amount difference for control lines and billing item:
6.4.1.4 status problem

E13 Different Status found: RRSTA.

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6.4.1.5 Currency problem

E19 Currency Differs in Control Lines and Revenue Lines.
E20 Currency Differs in Control Lines and Reference Lines.
E22 Currency Differs in Accounting Document and Control Lines.
6.4.1.6 Lock problem

E21 Document in Processing.
E23 System Error: Document Could Not Be Blocked.
6.4.1.7 Assignment problem

E25 Error during determination of posted values on account: Revenues not posted!
E26 'No FI documents found. Revenues not posted!'
The complete explanations find in the note 399777 and 542161.
Schedule VF47 on a weekly basis and review errors.
If errors occurs please contact SAP support.

Important precondition for running VF47 is the implementation of all notes for the VF47,
see below.

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3851 49 Report for saving sales documents without changes

7394 95 VF47: Incorrect listing of E17 errors
73 VF47: No error code flag with mixed types
7174
7069 55
(optio nal) VF47: Package processing via control lines
6607 42 Incorrect error message E25 in VF47
6560 13 (optional) Authorization check of update function VF47

6003 34 Incorrect status determination (header) in VF47
5901 43 Minor subsequent corrections from Note 542161 (VF 47)
5788 40 Activation: reference procedure VBRR in VF47
5421 61 Error corrections in transaction VF47
84 Extension of syntax warnings in VF47
5369
5273 01
(rrrel=D) Incorrect messages with category "D" in VF47
7691 03 (rrrel= D) VF47: Error E17 in case of several documents

3 99777 Report: consistency check of revenue tables (VF47)

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6.5 SD Monitoring with VF48

VF48 Overview
This compare report serves to explain the balance of an accruals account used in the
Revenue Recognition, or to check whether this balance corresponds to the SD data
(VBREVx tables). Its primary aim is to trace balances and not to trace possible
inconsistencies between SD and FI.
Transaction VF47 (Inconsistency Check in Revenue Tables) is available for
this purpose.
VF48 selection parameter

You must/can start the selection with the following selection parameters :
1. Company code (required entry field)
Enter the company code of the accruals account to be checked.
2. G/L account ( required entry field)
Enter the accruals account to be checked.
3. Posting period from/ to (required entry field)
Enter the period to be checked in posting periods.
4. Indicator: Only Not Cleared Documents (optional entry field)
If you set this indicator, only actions with incomplete revenue recognitions (revenue
postings and billing document postings) are taken into account, because only these
postings are necessary for an explanation of the balance. However, to trace the
balance, it may be necessary for the system to also display completed (cleared)
revenue recognition processes. In this case, the indicator must not be set.
Results of VF48
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If the necessary selection parameters were set and the report is started, a split screen
appears.

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6.5.1.1 Upper part of the screen - Balances

Here per currency different balances are displayed. For each currency in the form of a
calculation. The calculation consists of the following:
a) Balance from revenue recognitions

This balance is determined from the posted revenue lines in the VBREVE table. These
are the revenue amounts that were recognized in the selected period according to SD.
b) Balance from billing documents

This balance is determined from the posted, billing items in the VBREVR table that are
relevant for revenue recognition. These are the revenue amounts that were deferred in
the selected period according to SD.
c) Balance from other postings

If not only the revenue recognition process (VF44/VF46/VF01/VF02/VFX3) but also
other FI transactions such as FB01 posted to the selected accruals account, then these
values are not known in SD (VBREVx tables). This appears to result in an inconsistency
between SD and FI, but there really is no inconsistency at all.
d) Total balance
This is the balance of the accruals account for the selected period that was determined
in FI. If you now take the balance of revenue recognitions, minus the balance of billing
documents and minus the balance of other postings, then the result should reflect the
total balance in FI. If this is not the case, this result must be analyzed further, since
there is an inconsistency between FI and SD. Transactions VF47 and VF45 (among
others) are available for further analysis.

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6.5.1.2 Lower part of the screen - VBREVx rows (SD tables)
This is where SD detail data (VBREVx tables) concerning the selection at sales and
distribution document item level is listed. (The total in the 'Balance' column must equal
the total balance in FI). If the totals are different, there are inconsistencies between FI
and SD
The following values are displayed for the items:
a) Billed revenues
For the relevant document item, the revenue billed in the selected period is displayed,
based on the billing items relevant for revenue recognition (this is the revenue that was
posted to the selected accruals account). Data is retrieved using the reference line table
(VBREVR).
b) Recognized revenues
For the relevant document item, the revenue recognized in the selected period is
displayed, based on the VBREVE table (this is the revenue that was posted to the
selected accruals account). Data is retrieved using the revenue line table (VBREVE).
c) Accrued total value

This is the revenue amount of the document item to be recognized at accruals account
level. Data is retrieved using the control row table (VBREVK) in which the relevant
accrued total value is updated.

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d) Balance
This balance at document item level is calculated by subtracting the recognized
revenues from the billed revenues.
6.5.1.3 Additional function

In addition to the screen described above, you can also receive more detailed
information
a) Billing documents (F5)
This is where the billing items that are relevant for the
selected document item are displayed. A jump to the respective
billing document is also possible.
b) Other FI documents (F6)

If balances exist from other postings, the accounting documents
which resulted in these balances are displayed here. A jump to
the respective accounting document is also possible.
c) Overview (F7)
This is where the revenue recognition data that is relevant for
the selected document item is listed. This is done in Transaction
VF45 - 'Revenue Recognition: Overview.' For more information, see
Note 787174.

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7 Functional enhancements
Following is an overview of the technical extensions and new additions contained in the
special Support Package
.
46C SP49, additional notes from note 813850
470 SP23, additional notes from note 813850
Because of their size and complexity, these modifications cannot be performed

manually or by using the SAP Note Assistant.
The functions of each extension are described in detail in the composite SAP Note
800983.
1. Updating revenue recognition data on sales document

In some cases, revenue recognition data has to be redetermined, when goods are
issued or invoices are created. This means, that the sales document also must be
changed to reflect the new data. Previously, the data had to be updated using report
ZZ_SALES_DOC_CHANGE (manually or as a job). Now, report
ZZ_SALES_DOC_CHANGE has been replaced by transaction VF42 and report
SDRRAV54. There are now two available options:
Immediate update of sales documents, when invoices are created and the issue
of goods is posted.
Flagging documents, that are to be updated and updating them at a later time by
calling transaction VF42.
2. Modification of locking logic in VF44/VF46

The processing logic in transactions VF44 and VF46 has been changed to enable
running VF44/VF46 in parallel with invoicing. The user interface has also been
improved. Users receive detailed information about which revenues are to be
posted. After they are posted, the up-to-date values are displayed on screen.
3. (Manually) completing contracts / correction rows for contracts

For contracts, there was no definition in the system to state, when a process was
finished. To deal with this, a new DDIC field was set up in tables VBUP/VBUK
(MANEK = manual end of contract). Using this field, contracts can be closed or
completed. A revenue recognition correction row for contracts can still be created
with it.

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4. Status determination
VF44 sets the status in VBUP. VF44 also writes an entry in table VBREVC. The
overall status is then set by program SDRRAV54 (see point 1).
5. Report for reconciliation/reproduce-ability of accruals accounts

With a new report (transaction VF48), the balance of an accruals account can be
analyzed across periods. You must use notes 798033 and 780126 to be able to run
this report. They create the necessary data model. If you do not use these notes,
transaction VF48 will not work with the documents.
6. Extension of transaction VF45

The report was set to ALV GRID. The control rows are displayed and VBREVE can
be displayed. VPRS is still incorporated into the display, and links to the associated
SD and fixed documents are possible.
7. Changing the cancellation update VF46

The field REVFIX was added to table VBREVE. With this field, source and
cancellation lines can be updated separately. This is necessary to display
cancellation rows in the process and data control functions more clearly.
8. Error handling in account determination

Account determination is not interrupted, if a condition, that is relevant to revenue
recognition, is entered, but for which no accruals account was specified in
customizing. Only when all conditions have been processed, the system returns the
incomplete notification.
9. Archiving for the revenue recognition tables

A new archive object (SD_VBREV) is available. Archiving is now independent from
the order or invoicing. It does not take place until the source objects have been
archived.

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8 Restrictions from SD side
8.1 General restrictions

 The order/contract has to include a billing plan or at least contract data, if you are
using time related revenue recognition (A or D).
 The document type for the revenue recognition document is 'RV'. This
assignment is hard coded and an internal number range is mandatory.
 When using report ZZVF44HN (VF44 in the background) and an error occurs
during the posting of FI documents, the system triggers command ROLLBACK
WORK and thus the creation of the accounting documents is prevented for the
entire packet and an error log is written. A current processing packet consists of
a maximum of 999 control lines. (valid only for systems before Rel 46C, Sp 49 or
Rel 470 Sp 23)
8.2 Account restrictions

 Separate accounts for G/L account and deferred revenue account have to be
maintained in customizing, transaction VKOA (see note 777996).
 Third account for the unbilled receivables must be maintained in customizing,
transaction OVUR (see note 777996).
 The G/L account must be different from the deferred revenue account and from
the unbilled receivables account. Otherwise no ‘real’ revenue recognition can
take place.
 Note 568227 has to be implemented.
 There must be no change of the revenue recognition accounts in case of
contracts with call-off orders using revenue recognition relevance ‘B’.
8.3 Cost restrictions

 In the customizing of CO-PA the costing based profitability analysis has to be
active (see transaction KE4I).
 If in the CO document the value of each condition has to be listed, there must be
different accounts for each condition.
 With the revenue recognition functionality costs will be passed to CO-PA during
the revenue recognition run, if the following preconditions are met:
o VPRS condition has to be statistical and KNTYP has to be ‘G’
o The item must not have an account assignment object associated with it.
Relevant account assignment objects are: AUFNR, VBELV / POSNV,
PS_PST_PNR.

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This means that posting of VPRS condition for items relevant for revenue
recognition depend on the non-existence of an account assignment object.
If the item has an account assignment object, VPRS will be ignored during the
revenue recognition run and the costs are posted with releasing of the invoice. In
this case revenues and costs are posted at different times.
 If the VPRS condition is set as accrual-relevant cost condition (XKOMV-KRUEK
= ‘X’), the cost (VPRS) is posted directly as an accrual in the financial
accounting. An accrual of the costs in the revenue recognition does not occur,
that is, neither during the billing nor during the actual revenue recognition the
cost is considered.
 A single statistical VPRS condition without a revenue condition cannot be
processed. To post a VPRS condition by the revenue recognition and not by
billing, the system requires a relevant pricing condition.
 When using time based revenue recognition the cost amount per period is
calculated from the total cost amount in the same way, the revenue per period is
calculated:
o When using a periodic billing plan the value of the VPRS condition is
considered in each period.

o When using partial billing plan the value of the VPRS condition is split.
 When using performance based revenue recognition the total cost amount for the
event is posted in the period the event occurs.
Exceptions: - If the goods issue posting is non-valuated the costs are deter-
mined from the sales order item.
- If the valuation is done at item level in a batch material the costs
are determined from the sales order item.
8.4 Adjustment restrictions

 There are different changes possible, which will affect revenue recognition data:
o time adjustments
o price adjustments
Time adjustments can be:
o changes of the contract data
o changes of the billing plan data: end date (FPLA-ENDAT)
dates from (FPLA-LODAT),
dates to (FPLA-TNDAT).
o add settlement periods manually
o delete settlement periods manually
Price adjustments can be:
o change of a condition value in the sales document
o change of a condition value in the billing document
o add a condition in the sales document
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o add a condition in the billing document
 If a billing plan is used, the billing plan data has to be updated after the changes,
otherwise there is no VBREV* update.
Preconditions:
o The Corr field (FPLA-AUTKORR) has to be set, so that a correction
settlement period is created within the billing plan and then the VBREV*
tables are updated according to the change.
o In the customizing of the used data category, which is assigned to the
billing plan type, the pricing type must not be set to ‘B’. Then the billing
value will be redetermined and the VBREV* tables are updated (except
for the settlement periods that are invoiced).
 If a condition is added manually in the invoice, not in the contract/order, and the
new condition is using separate accounts, the related conditions have to be
classified in a way that they are no longer relevant for revenue recognition. The
value of those conditions will be posted directly to a revenue account and not to a
clearing account. Please have look to note 496721. This issue applies when
using revenue recognition method ‘A’ or ‘B’.

 If a condition is added manually in the sales document and also a time
adjustment is done, e.g. a new settlement period is added, the value of the new
condition is populated in revenue lines for the entire validity period and not only
for the new settlement period.
o If the new condition has its own G/L account, separate revenue lines are
created.
o If for the new condition the same G/L account is determined as for the
other conditions, the existing revenue lines are updated and, in case of
already recognized revenues, adjustment lines are created.
This is standard functionality due to the fact, that pricing occurs at item level and
not at the level of the settlement periods. No check is done to see, if the condition
is only valid for one settlement period.
 If the net value to be recognized in the item relevant for revenue recognition will
be changed and if revenues have already been posted, the system must enable
a correction posting for the difference amount.
This means, that the system considers the new situation in whole and checks,
which correction is necessary by comparing the old and the new amount for each
period.
The total difference is added to the value of the first open period (where
VBREVE-RRSTA = 'A'). For the new periods the amount, which has to be
recognized according to the new net value, will be set.
 If a sales order is relevant for performance based revenue recognition and
adjustments are necessary in case of under/over the value, which will be invoiced
has to be considered as revenue and posted to the G/L account.
If the order item is relevant for ‘delivery-related-invoicing’ (FKREL = A), it is

necessary to adjust the quantity of the order according the delivery quantity.

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If the order item is relevant for ‘order-related-invoicing’ (FKREL = B or I), it is
necessary to adjust the revenues and to complete the order process. This is
done by the system as soon as a reason for rejection is set.
 If a sales order is relevant for performance based revenue recognition and
adjustments are necessary in case of a pricing change in the sales order, the
adjustment is only done, if there was no invoice created and if the delivery was
completed.
8.5 Restrictions for specific processes
 Contracts with call-off orders using revenue recognition relevance ‘B’:

o The call-off order items have to be linked to a contract item (e.g.
assortment functionality). Manually added items in call-off orders without
link to a contract item are handled separately.
o There must be no changes of the revenue recognition accounts (D/R

account / U/R account).
o There must be no over/under delivery of the call-off order items. If there
is a difference between billed and recognized value, it has to be posted
by a credit memo. The creation of a credit memo with reference to a
credit memo request doesn’t lead to the clearing of the balance and
therefore a credit memo has to be created with reference to the billing
document.
o After invoicing, there must be no changing of condition values and/or
time adjustments in contract and/or call-off-order.
o Before invoicing, there must be no changes to the condition values
and/or time adjustments in the call-off order items, which are not done in
the corresponding contract items.

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Revenue Recognition - Best Practice 9 Other restrictions
Knowledge Document
9 Other restrictions
9.1 REVREC and NON-REVREC Postings

 Please keep in mind, that revenue recognition relevant invoice positions always
post either to the D/R or the U/R account, but never to the revenues account.
 Non-revenue recognition relevant invoice positions in the same invoice always
post to the revenues account, but never to the D/R or the U/R account.
 To distinguish revenue recognition postings from other postings without revenue
recognition-relevance on the revenues account the revenue recognition-values
can be determined via header field BKPF-AWTYP (VBRR or former VBAK).
 For D/R and U/R accounts only revenue recognition relevant postings are
allowed. This means that only postings from invoices (with revenue recognition-
relevance) and postings from revenue recognition (VF44 / VF46) are allowed.
Otherwise, reconciliation becomes difficult or impossible. For manually posted
accruals or other adjustments, separate accounts shall be used.
9.2 Translation of foreign currencies

 The translation of foreign currencies cannot be accomplished in logistics.
 The translation of foreign currencies is possible on line item or on balances. To
translate on a line item level, the account has to be set as ‘open item
management’ otherwise the balances can only be updated in foreign currency.
 According to IAS, balance sheet accounts are generally translated using the
current closing exchange rate. Non-monetary items should be reported using the
historical exchange rate (the exchange rate at the date the transaction was
recognized). According to this unbilled- and deferred-accounts are not
revaluated.
 The P&L accounts are to be translated using the rates at the dates the
transactions were recognized. Because this is maybe impractical, appropriately
weighted average exchange rates can be used. These rules apply in case the
local currency is the functional currency of the respective subsidiary (which is
usually the case).
 These rules for translation of foreign currency statements are similar to US-
GAAP rules.
 When the open items on the D/R or the U/R account are cleared at the end of the
process (i.e. all invoices are created and all revenues are recognized), currency
differences should be posted to a currency differences account (P&L account)
affecting net income.

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Revenue Recognition - Best Practice 10 Important to do´s
Knowledge Document
10 Important to do´s
 Use go-live assessment offering in the implementation phase.
 As transfer of old data into the revenue recognition processes is required,
consider SAPs consulting offering.
 Set up revenue recognition functionality by SAP certified SD and FI consultants
and approve it by the responsible Head of Accounting and, if necessary, review it
by the external auditor of the company
- see chapter 5.
 Avoid program modifications.
 Don’t deactivate revenue recognition in the productive system landscape.
 Important remarks to consider in the job planning:
- Never run invoicing in parallel mode with the VF44 of the revenue recognition
process. before 46C HP 49 or 470 HP 23
- Schedule report ZZ_SALES_DOC_CHANGE / SDRRAV54. on a regular basis
to update the revenue recognition data in case of adjustments.
Important precondition for running report ZZ_SALES_DOC_CHANGE is the
implementation of note 568227.
 Monitor continuously the results of the revenue recognition processes
- see chapter 6.
 Implement the latest support package, especially the latest notes on revenue
recognition. Make sure that the functional enhancements are implemented
- see chapter 7 and 11.
 Consider the latest version of the SAP R/3 Revenue Recognition Best Practices
Guide. The link can be found in note 779365.
 Do not run VF44 and VF01 in parallel, when your system is not on the latest
support package for your release.

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Revenue Recognition - Best Practice 11 Important notes
Knowledge Document
11 Important notes
412660 Incorrect status in VBREVK after VA02, VA42, VF44

508305 List of the FI/CO documents contains too many
521671 No currency translation for billing documents
568227 Account changes causes data inconsistencies
598997 Incorrect correction lines for condition change
618110 Incorrect balance in VBREVK for billing item value
628020 Incorrect correction items with category B
681790 Incorrect FI documents for accrual periods with

696466 Incorrect adjustment line for type 'B' with call-off
731869 No cumulation in billing documents with posting
734577 No writing of control lines without detail lines

Of: 91

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SAP R/3 SD REVENUE

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 2

2 DESCRIPTION OF BUSINESS AREA.....................................................................8

2.2 The trigger and impact of the methods are:............................................................................................8

2.3 Typical Core Business Processes using the methods are........................................................................8

2.4 Business Process Specific Information.....................................................................................................9

3 IMPLEMENTING REVENUE RECOGNITION........................................................10

4 DESCRIPTION OF CORE BUSINESS PROCESSES............................................27

4.2 Time based revenue recognition (‘A’)....................................................................................................29

4.3 Service based revenue recognition (‘B’).................................................................................................33

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 3

4.5 Time based and billing related revenue recognition (‘D’)....................................................................41

Variations of the process.....................................................................................................................................46

5 PROCESSES CURRENTLY NOT SUPPORTED...................................................60

6 MONITORING OF THE REVENUE RECOGNITION DATA...................................61

6.3 SD-Monitoring with VF45.......................................................................................................................67

6.4 SD-Monitoring with VF47.......................................................................................................................70

6.5 SD Monitoring with VF48.......................................................................................................................78

8 RESTRICTIONS FROM SD SIDE...........................................................................85

8.2 Account restrictions.................................................................................................................................85

8.3 Cost restrictions........................................................................................................................................85

8.4 Adjustment restrictions...........................................................................................................................86

8.5 Restrictions for specific processes...........................................................................................................88

9.1 REVREC and NON-REVREC Postings................................................................................................89

9.2 Translation of foreign currencies............................................................................................................89

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 5

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 6

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 7

2 Description of Business Area

2.1 The available methods include:

2.2 The trigger and impact of the methods are:

2.3 Typical Core Business Processes using the methods are:

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 8

2.4 Business Process Specific Information

revenues will be realized. This is possible after the process is initialized

but not yet realized.

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 9

3 Implementing Revenue Recognition

3.1 Getting started R/3 SD Revenue Recognition

Don’t start implementing or customizing revenue recognition, when you don’t

46C SP49, additional notes from note 813850

Supported processes in revenue recognition

Before starting with the implementation of revenue recognition functionality, it is

This document contains detailed information about:

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 10

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 11

Starting with customizing

3.1.1.1 Global informations

Usage of R/3 SD Revenue Recognition functionality is under a special activation by

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 12

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 13

Customizing FI accounts and their settings

3.1.1.3 Unbilled receivable account and deferred revenue account

On Tab “Type/Description” field “Balance sheet account” (SKA1-XBILK) must be set to

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 14

On Tab “Control data” the following fields have to be fill out:

Field “Only balances in local currency” (SKB1-XSALH) to no *1)

SAP AG File: RR_Best_Practice_Knowledge_Document_V1.doc Page: 15

Here just “+” or “*” are used.