Recognize project revenue

Applies to: Dynamics 365 Finance, Dynamics 365 Project Operations

This article describes the setup, configuration, and design considerations for creating and managing revenue recognition in Dynamics 365 Project Operations and Dynamics 365 Finance. The article reflects a business process in the Manage project financials business process area within the Project to profit end-to-end scenario.

Revenue recognition and invoicing are independent of each other. Organizations follow different approaches to arrive at percentage of revenue to recognize, including but not limited to the approaches in the following list:

• straight-line method where revenue is recognized on a prorated basis over the project duration
• based on progress shown in the work breakdown structure
• percentage of actual cost compared to total budgeted cost
• percentage of actual hours compared to total budgeted hours
• any other method as project manager deems appropriate

Generally, revenue is recognized monthly. It is a transactional activity that organizations run in the operate phase of an implementation project.

Stakeholders

Many people in an organization should contribute to the decision-making process and design of the recognize project revenue business process in Dynamics 365. Stakeholders include, but are not limited to, the following list:

• Finance stakeholders – examples: CFO, accounting manager
• Operations stakeholders – examples: project manager

Finance stakeholders are responsible for recognizing revenue. Operations stakeholders are responsible for maintaining margins and revising estimates as needed.

Recognize project revenue process flow

The following diagram illustrates the business process for both project operations that are of any deployment type, including resource/non-stocked based scenarios and stocked/production-based scenarios deployments of Project Operations.

The recognize project revenue business process flow diagram covers the following steps for the finance manager role.

1. Start

2. Identify revenue streams.

3. Calculate revenue.

4. Review revenue calculations.

5. Approve revenue.

   1. If the revenue is approved, then record revenue.
   2. If the revenue is not approved, then revise revenue calculations, and then approve revenue again.

6. End

Implement the business process

The primary difference between the two deployment versions regarding revenue recognition is that in stocked or production-based deployment, the progress percentage in the effort tracking view is also used to recognize revenue.

Implementation in non-stocked deployments of project operations

In Dynamics 365 Project Operations, projects can be deployed as non-stocked deployments. This type of deployment does not support inventoriable materials to be consumed.

The following table shows the configurations available, and the sequence recommended for setting up the configurations from top to bottom. Use the links in the Process step column to learn more about the component. The Process stage column includes three values that are separated by semi colons (;). The first value indicates the project phase when a configuration or step should be completed. The second value indicates the type of configuration, and the third value indicates if the step is a configuration or an operational step. The Process modifiers column is used to further describe other attributes for each step. The Application: Navigation and Entity column uses abbreviations to indicate the user interface or application with the navigation path after the colon. First, we list the navigation to the relevant forms. Next comes the name of the entity for importing or exporting data in either the Dataverse (DV) or with Data Management Framework (DMF). We use the abbreviations to indicate the type of entity, followed by the name of the entity after the colon.

Implementation in stocked deployments of project operations

In Dynamics 365 Finance, projects can be deployed as stocked deployments. This type of deployment also supports the consumption of inventoriable materials.

The following table shows the configurations available, and the sequence recommended for setting up the configurations from top to bottom. Use the links in the Process step column to learn more about the component. The Process stage column includes three values that are separated by semi colons (;). The first value indicates the project phase when a configuration or step should be completed. The second value indicates the type of configuration, and the third value indicates if the step is a configuration or an operational step. The Process modifiers column is used to further describe other attributes for each step. The Application: Navigation and Entity column uses abbreviations to indicate the user interface or application with the navigation path after the colon. First, we list the navigation to the relevant forms. Next comes the name of the entity for importing or exporting data in either the Dataverse (DV) or with Data Management Framework (DMF). We use the abbreviations to indicate the type of entity, followed by the name of the entity after the colon.

Next steps

To implement Dynamics 365 solutions to assist with your recognize project revenue business processes, use the following resources and steps to learn more. (Links are added when the articles are ready.)

1. Develop project strategy

2. Manage project contracts

3. Plan projects

4. Manage project delivery

5. Manage project financials

   1. Correct project transactions
   2. Convert projects to fixed assets
   3. Invoice project milestones
   4. Invoice project transactions
   5. Recognize project revenue (the article that you're currently reading)

6. Analyze project performance

Related patterns

The following patterns are available to help guide your implementation of the recognize project revenue business process.

• Pattern link 1
• Pattern link 2
• Pattern link n… -->

Related resources

You can use the following resources to learn more about the recognize project revenue process in Dynamics 365.

• Dynamics 365 Project Operations Demonstration - TechTalk (youtube.com)
• Revenue recognition overview - Dynamics 365 Project Operations
• Manage project financials business process area
• Project to profit end-to-end scenario

Contributors

This article is maintained by Microsoft. It was originally written by the following contributors.

Principal author:

• Ruchi Gupta | Deputy Manager at Protiviti India Member Firm

Other contributors:

• Satya Teki | Senior FastTrack Solution Architect