Manage Revenue Recognition Models
Revenue recognition rule models define how to recognize and distribute revenue over a recognition term. This article describes rule models and the rule models available for recognizing revenue. It also explains how to enable specific revenue rule models for use in your tenant.
What is a Revenue Rule Model?
A revenue rule model is the underlying template used to create revenue rules. A rule is an instance of a rule model that you can create and apply to a product charge. The revenue rule includes various configurations such as recognition start and end dates. Rules are assigned to your product rate plan charges.
Zuora supports billing-based or custom revenue rule models.
See Components and Configuration Options for detailed information on the components the comprise a revenue rule model.
Billing-based Revenue Rule Models
These models use billing as the basis for recognizing revenue. The following billing-based revenue rule models are supported:
- Daily recognition over time: Revenue is recognized evenly each day over the recognition term, with some exceptions discussed below.
- Full recognition on a specific date: All revenue is recognized on a specific date.
- Full recognition upon invoicing: All recognition is recognized on the invoice date.
- Manual recognition: Revenue is distributed manually over the recognition term.
- Monthly recognition over time: This model works for service period of 3 months or more only. The first and last months are prorated based on the contract effective/service activation/customer acceptance date, the months in between are recognized evenly. This model does not work for monthly charges. If the service period is less than 3 months, the revenue rule defaults to Daily recognition over time.
Custom Revenue Rule Model
A custom revenue rule model lets you recognize a revenue amount in any way you choose over a recognition term. Use this revenue rule model to manually create a revenue schedule and specify the amount of revenue to recognize. Only basic information is required when custom revenue rule.
See Manually Create Revenue Schedules for more information.
Which Revenue Rule Model Fits My Needs?
Revenue rule models are fully automated, assisted, and fully customized. Use the following table to help you determine which rule model best addresses your revenue requirements:
| Type | Description | Revenue Rule Model | Auto-Created Revenue Schedule | Auto-Distributed Revenue Schedule |
|---|---|---|---|---|
|
Fully Automated |
The entire revenue recognition process occurs automatically when certain events occur, such as when an invoice is posted. Fully automated rule models are a good choice if your organization uses standard billing-based revenue recognition logic. |
Billing-based:
|
 |
|
|
Assisted |
Part of the recognition process is automatic. Revenue schedules are auto-created when certain events occur. Revenue is distributed manually. You control the amount of revenue to distribute into accounting periods and when. Assisted rules are a good choice for business-to-business companies with complex billing logic. Examples of manual recognition include:
|
Billing-based:
|
|
 |
|
Fully Customized |
You have complete control over the recognition process. Revenue schedules and the distribution of revenue is manual. Fully customized rule models are a good choice for companies that use another method outside billing-based logic to recognize revenue. |
Custom:
|
|
|
Enable Revenue Rule Models
You can enable the revenue rule models you want to use. You can disable a revenue rule model only if it not associated with a product rate plan charge.
Navigation: Click your username at the top right and navigate to Finance Settings > Manage Revenue Recognition Models
The Monthly recognition over time rule can only be enabled if all accounting periods are calendar month-based, such as a monthly or quarterly accounting period.