Unleash the Power of Billing Offset Functionality in Oracle PPM 

Author: Sunny Chhabra(Oracle PPM Solution Architect)

Billing Offset Functionality helps to correctly track and post the unbilled Receivable and Deferred Revenue accounts. The billing offset process needs to be run at each month's end.

Note : The account code is used from the standard Oracle Demo instance  

Scenario 1: Where the Invoice is more than the Revenue

Invoice Accounting

Line	Legal Entity Name	Account	Class	Accounted (USD)
				Debit	Credit	Subjective to Post
1	US1 Legal Entity	101.10.12101.000.000.000	Receivable	1,082.50		Receivables
2	US1 Legal Entity	101.10.49100.000.000.000	Revenue		1,000.00	Deferred Revenue
3	US1 Legal Entity	101.10.25200.000.000.000	Tax		82.50
4	US1 Legal Entity	101.10.78560.121.000.000	Rounding		0.00

 

Revenue Accounting

Line	Event	Legal Entity Name	Account	Class	Accounted (USD)		Subjective to Post
					Debit	Credit
1	External Revenue	US1 Legal Entity	101.10.12310.000.000.000	External unbilled receivable	800.00		Unbilled Receivables
2	External Revenue	US1 Legal Entity	101.10.46000.620.000.000	External event revenue		800.00	Revenue

 

Billing Offset 

Billing offset will always create Deferred to Unbilled accounting and the Amount will be the lesser between Revenue and Invoice(In this case Revenue is less than invoice so it will pick Revenue amount).

Line	Account	Class	Accounted (USD)		Subjective to Post
			Debit	Credit
1	101.10.49100.000.000.000	Billing offset deferred revenue	800.00		Deferred Revenue
2	101.10.12310.000.000.000	Billing offset unbilled revenue		800.00	Unbilled Receivables

Final Accounting result (Invoice is greater than Revenue)

 

Scenario 2: Where Invoice is less than the Revenue

Invoice Accounting

Line	Account	Class	Accounted (USD)		Subjective to Post
			Debit	Credit
1	101.10.12101.000.000.000	Receivable	757.75		Receivables
2	101.10.49100.000.000.000	Revenue		700.00	Deferred Revenue
3	101.10.25200.000.000.000	Tax		57.75
4	101.10.78560.121.000.000	Rounding		0.00

 

Revenue Accounting: Accrued Revenue.

Line	Account	Class	Accounted (USD)		Subjective to Post
			Debit	Credit
1	101.10.12310.000.000.000	External unbilled receivable	1,200.00		Unbilled Receivables
2	101.10.46000.620.000.000	External event revenue		1,200.00	Revenue

 

Billing Offset

 

Line	Account	Class	Accounted (USD)		Subjective to Post
			Debit	Credit
1	101.10.49100.000.000.000	Billing offset deferred revenue	700.00		Deferred Revenue
2	101.10.12310.000.000.000	Billing offset unbilled revenue		700.00	Unbilled Receivables

 

 

Final Accounting result (Invoice is less than Revenue)

  

Scenario 3: When Billing is equal to Revenue.

Invoice Accounting

Line	Legal Entity Name	Account	Class	Accounted (USD)
				Debit	Credit	Subjective to Post
1	US1 Legal Entity	101.10.12101.000.000.000	Receivable	1,623.75		Receivables
2	US1 Legal Entity	101.10.49100.000.000.000	Revenue		1,500.00	Deferred Revenue
3	US1 Legal Entity	101.10.25200.000.000.000	Tax		123.75
4	US1 Legal Entity	101.10.78560.121.000.000	Rounding		0.00

 

Revenue Accounting

Line	Account	Class	Accounted (USD)		Subjective to Post
			Debit	Credit
1	101.10.12310.000.000.000	External unbilled receivable	1,500.00		Unbilled Receivables
2	101.10.46000.620.000.000	External event revenue		1,500.00	Revenue

 

Billing Offset

Line	Account	Class	Accounted (USD)		Subjective to Post
			Debit	Credit
1	101.10.49100.000.000.000	Billing offset deferred revenue	1500.00		Deferred Revenue
2	101.10.12310.000.000.000	Billing offset unbilled revenue		1500.00	Unbilled Receivables

 

 

 

Final Accounting result (Invoice is equal to Revenue)

 

 

When a contract line is ready to be marked complete, users should open the Manage Billing Offset Balances page, select that contract line in the search results, click Create Accounting Transaction, “turn off the Reverse accounting transaction in the next period option”, and click Save and Close.  This will create a billing offset reclassification accounting entry that will not reverse in the following accounting period.  Then the contract line can be closed.  Closed contract lines are not eligible for billing offset reclassification.