Opening Balances for Recognition Schedules

If you are migrating to recognizing revenue and cost against recognition schedules, make sure the values already recognized on your source records are accurate and have been reconciled before you populate the Revenue Recognized to Date Value and Cost Recognized to Date Value fields used by Revenue Management. This is because the values in these fields are treated as opening balances when you generate recognition schedules for the first time.

If a source record has a Revenue Recognized to Date Value or Cost Recognized to Date Value the first time you generate recognition schedules, that value is treated as an opening balance and a recognition schedule line with the status "Opening Balance" is generated. The opening balance value is subtracted from the source record's total revenue or total cost, and the remainder is scheduled over the periods following the opening balance period.

However, if there is a difference between the opening balance value and the value that Revenue Management calculates should have been recognized to date, then:

• If the source record's recognition template has a Calculation Adjustment Type of "Prospective", the remaining value is distributed equally over the periods following the opening balance period.
• If the source record's recognition template has a Calculation Adjustment Type of "Retrospective", Revenue Management generates an additional "Recognizable" recognition schedule line in the opening balance period to ensure that the recognized to date value matches the value that Revenue Management calculates should have been recognized to date. This is sometimes known as a catchup adjustment.

The example below gives an illustration of the difference.

Notes:

Recognition schedule lines with the status "Opening Balance" are not included in recognition processes because they represent revenue or cost amounts that have already been recognized.

Once you have recognized revenue or cost for a source record that has an opening balance line, if you make further changes to the source record the opening balance line is not updated. If you need to update the opening balance information, for example to change the opening balance value, you must discard all recognition transactions linked to the source record's "Complete" recognition schedule lines.

Controlling the Opening Balance Period

When you enable the Recognize against Recognition Schedules feature, feature step 3 sets the Global Opening Balance Cutoff Date to the current date. You can change this date by editing the Global Opening Balance Cutoff Date field in the Revenue Management Settings custom setting. The date set in the Global Opening Balance Cutoff Date field determines the opening balance period used for your source records unless you configure a field mapping in your source object's recognition settings record for Opening Balance Cutoff Date.

If you configure a date or date/time field mapping for Opening Balance Cutoff Date in your source object's recognition settings record, and the mapped field on your source record is populated with a date, it overrides the Global Opening Balance Cutoff Date. This means that the date representing the opening balance cutoff date on the source record determines its opening balance period. If the mapped field on the source record is not populated with a date, the Global Opening Balance Cutoff Date applies.

If there is no mapping for Opening Balance Cutoff Date in a source object's recognition settings record and the Global Opening Balance Cutoff Date field is not populated, then the source record's start date is used to determine its opening balance period. For source records using a Deliverable template, the end date is used.

Note:

If the cutoff date derived from the recognition settings record mapping, or from the Global Opening Balance Cutoff Date, falls before the source record's start date, then the source record's start date is used (or end date for source records using Deliverable templates).

If the cutoff date derived from the recognition settings record mapping, or from the Global Opening Balance Cutoff Date, falls after the source record's end date, then the source record's end date is used.

Example

A source record with a total revenue of 12000 uses an Equal Split - Months recognition template.

The source record's start date is January 1, 2022 and end date is June 30, 2022.

The Revenue Recognized to Date Value is 2500, and the Opening Balance Cutoff Date is March 1 2022.

When you generate recognition schedules for the source record, the following recognition schedule lines are generated. Note that recognition schedule lines are not created for the January and February periods.

Period	Revenue using Retrospective Adjustment	Revenue using Prospective Adjustment	Status
2022/003	2500	2500	Opening Balance
2022/003	3500	-	Recognizable
2022/004	2000	3166.66	Recognizable
2022/005	2000	3166.67	Recognizable
2022/006	2000	3166.67	Recognizable
Total	12000	12000

If the source record's recognition template has a Calculation Adjustment Type of "Retrospective", a catchup adjustment for 3500 is created in the opening balance period because 6000 should have been recognized during the first three months.

If the source record's recognition template has a Calculation Adjustment Type of "Prospective", no catchup adjustment is created. Instead the remaining value is distributed equally over the periods following the opening balance period. This is calculated as: (12000 - 3500) / 3 = 3166.666666

Note:

Once any recognition schedule lines are recognized, the "Opening Balance" line is not updated if the source record changes.