Oracle Revenue Management Cloud Services | what is ORMB? | revenue management and billing cloud

RMCS-Revenue Management Cloud Service

The core principle of ASC 606 and IRFS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
ASC 606: Revenue from Contracts with Customers. In the US, this rule was issued by the Financial Accounting Standards Board.
Perhaps the biggest difference between the old regulation and the new is that you now review revenue at the inception of the sales order. You identify contracts and performance obligations without any dependencies on actual billing of the customer

Deferred Revenue Accounting replaced with performance obligation Accounting.
Issue with deferred Revenue Accounting is that-deferred revenue was classified as a liability, but it did not meet the definition of a liability.
You don’t owe it to anybody
You are just sitting on it until it is allowed to be recognized

Allocates revenue according to published guidelines.
Identifies and creates customer contracts and performance obligations based on user-defined rules.
Provides user-defined rules from contract identification to revenue accounting generation.
Books revenue when a performance obligation is satisfied.
Processes revenue independently of billing.
Simplifies and automates revenue accounting across product bundles.

You defer that part of a sales invoice you can’t recognize as revenue.
You value the deferral at fair value and it is nonmandatory.
You calculate and book liability when you issue Invoices.
Liability is a list of invoices not yet posted to the P & L in full or in part for future release to the P & L.
You book the invoiced amount to the P & L when you meet the regulatory definition by industry.

You accrue for goods and services that you owe to customers because either you or they have relied on the contract. You no longer defer revenue.
You value the accrual at estimated consideration and it is a monetary debt.
You calculate the liability at inception and bock it when either party acts An act could be shipping or invoicing.
Liability is a list of goods and services you actually owe to customers for future satisfaction via transfer.
You book revenue to the P & L when you satisfy the customer with no industry-specific rules bill or not billed.

Get an overview of Revenue Management, learn about security and discover the Functional Setup Manager. oracle revenue management configuration

by KnowOracle

A promise in a contract with a customer to transfer to the customer either:

• A good or service (or a bundle of goods or services) that is distinct or

• A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer

Item	Standalone Selling Price	Performance Obligation No.	PO Classification	Revenue Recognized
Smart Phone	490.68	1001	Point On Time	490.68
Voice Plan	588.82	1002	Over Time	50.01 1st mo.
Data Plan	392.50	1003	Over Time	33.34 1st mo.

When a contract is identified in Revenue Management, each line item in the contract is a performance obligation. When the performance obligation is satisfied, revenue is recognized.
In this example, one contract is created with three lines. Line 1 is for the smartphone and line 2 the voice plan and line 3 the data plan.
Revenue is recognized for the smartphone on the day the customer physically receives the phone. The revenue for the voice and data plans are recognized for $50.01 and $33.34 for the first month. Subsequent months amounts are calculated based on the number of days in each month.