Overview of Contract Management User Interface

Contracts Requiring Attention. Contracts that require user attention are going to be displayed in the Overview page

If we look at the Overview page, all the way to the top right, there's going to be the Tasks Panel navigation. The Tasks icon is going to allow me to navigate to "Manage Customer Contracts" page where I can run a search. The search button is going to allow me to search contracts using the contract numbers as a parameter. And then we have a link a shortcut to Reports.

You see at the top, there's different tabs:  Pending Review tab, the Pending Allocation tab, Pending Revenue Recognition. 

The Pending Review tab is going to display contracts with total transaction price over the user-defined amount. The user-defined amount threshold is set in the Manage System Options for Revenue Management page when you do your System Options configurations. A human being will perform the review and then mark the contract as reviewed. And then you can go on with the revenue recognition process at that point.

There is also a new attribute in the Customer Contracts Source Data Import Template called " Manual Review Required". This attribute will "force" the contract to be reviewed when uploading customer contracts using the FBDI template. If you populate the value Y for Yes, that contract will be marked for contract under pending review.

Pending Allocations tab. This would list contracts with missing standalone selling price. The contract data was loaded, but maybe there were no standalone selling prices for the period in question. Remember that with standalone selling prices, we work with effective periods. And so that would be the reason you will see any contracts here.

So how do you fix this issue? You would have to load standalone selling prices for the period in question. It could be also that there's missing foreign currency details. But mostly, if the contract ends up here, it's because of the issue with the standalone selling price.

Pending Revenue Recognition tab. This will list contracts and missing data that's required to automatically create satisfaction events. If you haven't recognized a revenue yet, it's because either you haven't satisfied the obligation with the customer, or the information hasn't been loaded to Revenue Management. So maybe the performance allocations are satisfied, but it has not yet been recorded in Revenue Management. Revenue Management needs to receive that data in order to proceed to recognize a revenue.

Also, it maybe that the satisfaction plan is missing. Start and end dates may be missing in connection with the satisfaction plan. When we think about satisfaction plan, I want you to remember the revenue scheduling rules. So revenue scheduling rules determine if everything is going to be recognized in one period or multiple periods daily. Is it going to be based on a fixed schedule versus variable schedule, and so on. Notice here also another important attribute, Satisfaction Plan Duration.

Manage Customer Contracts page

Manage Customer Contracts page allows you to review details such as performance obligations and promised details. If you look at the top-left portion of the page, right under Manage Customer Contracts, you see these radio buttons. You can search by Contract, by Obligation, or by Promised Detail. Here you can also mark contracts as reviewed, see contract history, view Accounting details, including inventory item information, selling amounts, revenue recognized, billing amounts.

If you go to the Actions dropdown, right next to the Save button, top-right corner of the page, here's the Contract History and the option to View Accounting. if we go to Contract History to see what we can find, we can see here this is an audit log. And it chose different actions that were taken and who did it. That's very helpful from an auditing perspective.

Automatic Renewal of Revenue Contracts

This is a new feature And  the idea here is that if you have recurring contracts that you can automatically renew them.  Revenue Management is going to renew that original accounting contract or convert it to a new periodic accounting contract.

To renew a revenue contract, Revenue Management needs to use attributes to identify which contracts to renew:

• Recurring Indicator
• Recurring Frequency
• Recurring Pattern
• Recurring Amount

These attributes are going to come from the Revenue Basis Data Import Template. These values must be populated and then you have to run a process called "Create Contract Renewal Source Data" program. The end of this program, are this renewable source data is going to go through the regular flow, where Revenue Management is going to use contract identification rules to group lines into a contract. Order lines are going to be identified and automatically renewed, so long as those recurring characteristics are there.

Ability to Clear Balances for zero price transaction lines without a bill.

The idea here is that you are dealing with free goods and services. That's the first thing we want to point out, free goods and services.
Revenue Management can create a billing line with a unit price of 0 for those free goods and services when a revenue source document line with a unit price of 0 is loaded. When that scenario takes place, then Revenue Management will create that billing.

Why is this important? Because you can clear out the right to bill and clear out balances in the contract asset account. This is not something you're going to be receiving any consideration from the customer. So you have to clear out that right to bill, clear balances in the contract asset account. So that's the idea here with this new feature.

Contract Revisions

You are required to disclose when a contract is being reviewed. There's different reasons why you would review a contract. It could be a return of the product that you sold. It could be a correction. You're processing a variable consideration estimation correction. Or it could be that you're modifying the contract. This is required to comply with the ASC 606 and IFRS 15 standard. You need to be able to distinguish between revisions.

So this is something that can be loaded in the database's import template. And so there's going to be a column there that will allow you to track these revisions called "Intent Type". What are some of the valid values there?

1. CM for Contract Modification
2. EC for Estimate Correction
3. UA for Unassigned

In terms of the setup, this is configured from the the Source Document Types configuration, in "Manage Source Document Types". When you define your source document types, you can populate a default revision intent. Also, when you look at an actual contract, in the Revenue Management work area under the "Manage Customer Contracts" tasks, if you go to Promised Details and Line Reference Details, you're going to see there the Revision Intent. And that is something that can be updated.

Discard Customer Contracts process

This dismantles the contract, It does not delete a contract.  What it allows you to do is dismantle an already identified contract so that you can reassemble it. It gives you the flexibility to reorganize transaction lines.

Changes to Allocated Revenue on Open Performance Obligations Due to Immaterial Changes. 


Contract revisions for material changes is core part of Revenue Management functionality. It is not new. What we are talking about here is immaterial. This new feature has been introduced to support additional flexibility of contract reallocation and recognition as a result of these immaterial contract updates. Your organization will decide what's immaterial versus what's material. It's subjective. It depends on your industry or on your organization.

The idea here is to maintain revenue recognized for past periods and to be able to record changes in revenue in current and future periods. Revenue Management will reverse revenue recognized from the contract revision date and reallocate revenue on open new obligations starting from that contract revision date. 

Revenue Management is going to reverse recognized revenue on open obligations starting at the contract revision date. It will derive the unrecognized revenue, derive the consideration for reallocation, meaning what you expect to receive from your customers for delivering goods and services. And then here you can it will allocate the new consideration among the open and new obligations.

In the FBDI template there is a "Termination Date" and "Immaterial Change Type" column. These two attributes that are going to be relevant to this new feature here, Changes to Allocated Revenue on Performance Obligations Due to do Immaterial Changes.

In terms of the configuration, we are looking at a Source Document Type. And in the Source Document Type, we can specify a default Immaterial Change Type. That would be the place where you would go when defining the source document types.