Date post: | 22-Nov-2014 |
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Example of Companies using Armanino’s Revenue
Management Solution for Dynamics AX
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Q. What types of companies typically use Armanino’s
Revenue Management for Microsoft Dynamics AX?
A. Any company that sells multi-element arrangements or
bundles. A few examples include:
• Electronics OEMs
• Industrial Equipment Mfrs
• Software Companies
• Telecommunications
• Electro-Medical Device Mfrs
• And many more
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Any packaged combination of
items such as (but not limited to):
• Multi-software offerings
• Software and services
• Software, hardware, and services
• Hardware, post contract support and
warranties
Examples of Multi-Element Arrangements
or Bundles
Software
Services
Hardware
Warranties
Support
The challenge is each of these accounting units needs to be recognized
individually to ensure appropriate accounting. If companies do not determine
value of (or break out) multi-elements, they have to treat the arrangement as a
single unit of accounting. This results in the deferment of more revenue upfront.
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Armanino’s Revenue Management Module for Dynamics AX addresses
many of these common business scenarios:
• Selling packaged bundles such as software packages, software and
services, hardware plus post contract support (PCS) and warranties, etc.
• Accounting needs to identify & allocate appropriate revenue to each element
• Manage the automatic deferral and recognition of revenue
• Recognize revenue upon events or with an
amortization schedule
And enables companies to:
Specify multiple elements or accounting units
within bundles
Defer recognition until customer acceptance
Handle mid-month contracts, adjustments,
and co-termination
Business Challenge & Revenue Management Solution
Bundle
Item #1
Revenue by unit
Item #2
Revenue by unit
Item #3
Revenue by unit
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1. Companies that sell multi-element arrangements must follow specific accounting guidelines under GAAP (EITF 08-01, EITF 97-2, ASU, etc).
2. Revenue management is about determining the appropriate amounts & timing of revenue recognition.
3. With Armanino’s Revenue Management for Dynamics AX Module, companies can automate their entire revenue deferral, reallocation and carve out, and revenue recognition routines.
Fundamental “Take Aways” regarding the Principals
of Revenue Recognition
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Core Concepts of Revenue Management
Determining the Estimated Selling
Price
Identify Essential vs. Non-Essential
Elements
Allocations: Revenue Carve
Outs & Reallocation
Revenue Deferral
Timing & Amount of Recognition
Revenue Amortization
Schedules
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• EITF 97-2 & 98-9 – Residual method of accounting
• EITF 81-1 – Contract accounting
• EITF 08-01 (ASU 2009-13): Multiple deliverable revenue
arrangements
• EITF 09-03 (ASU 2009-14): Deals with arrangements that
include both hardware and software elements
Revenue Recognition According to GAAP
GAAP Generally Accepted Accounting Principles
GAAP provides guidelines for acceptable revenue recognition practices for a
given industry with specific considerations that need to be interpreted for each
company.
Armanino’s Revenue Management for Dynamics AX provides a flexible
parameter driven setup to automate the appropriate revenue calculations, deferrals
and recognition events – to comply with these GAAP requirements.
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Revenue rules determine recognition timing
• Immediately upon invoicing
• Deferred until an event, partial fulfillment or % based recognition
• According to an amortization schedule
Recognition schedules can be static, dynamic, edited
• Static - Fixed over 12 months
• Dynamic –12 months, amortized over 13 periods, daily
calculations, with future start dates
• Catch up – Spread over defined start/end date for co-termination
• Edits & Adjustments – Adjust recognition start dates, hold until
customer signoff, returns and cancellations
Revenue Deferral & Recognition
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• Automate the systematic calculation of VSOE from historical sales
• Parameter driven, systematic calculation of median price:
o At “item” or “item group” level
o Minimum # of occurrences can be set
o Configurable time period definitions
o Thresholds / tolerances for including in calculation
o Ability to auto-update the VSOE revenue price table
o Full audit trail and justification reports
Establishing VSOE Based on Median Price
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Sales Order Entry & Invoice Format
BESP & Revenue Reallocation
Presented on
customer
invoice
Revenue Basis for
GL accounting
- or -
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Revenue Recognition / Deferral
• Recognized revenue and cost of goods (COGs) posted to GL at time of
invoice
• Deferred revenue and COGs posted to deferred accounts
• Automated revenue schedules generated for recognition of deferred
revenue
• Workbench to review schedules - edits, rescheduling, holds, partials, etc.
• Periodic routine or batch job auto-creates revenue recognition journals
• Full drill down of all postings & audit trail of all changes
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Partner Customizations
Customer Development
Dynamics AX 2012: Where does the Revenue Management
Module from Armanino fit in?
User Layer (User
Preferences)
Customer Layer
(Customer Development)
VAR Layer (Partner Customizations)
ISV Layer (Revenue Management)
Microsoft Dynamics AX 2012
Module sits here
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• Microsoft Dynamics AX VAR since 2003
• 70+ certified AX consultants
• 4 Customer Excellence Award Winners
in the last 3 years
• Dynamics AX ISV TAP Program
• High Tech Industry Solutions:
o Revenue Management
o High Tech Manufacturing & Distribution
o Distributor Sell-Through Management
o Supply Chain Interface
• Dedicated post go-live support desk
About Armanino
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Learn More about Armanino’s Revenue Recognition
Management Module for Dynamics AX
For questions or to schedule a demo,
contact:
John Van Metre
Sales & Business Development
408.712.0743
Visit us online:
http://learn.amllp.com/revenue-recognition-
management-for-microsoft-dynamics-ax