Setup Considerations: Multiple-Element Revenue Allocation

Administrator Guide

You can use this topic to help make decisions when planning your configuration and use of multiple-element revenue allocation. It explains:

Why to set it up.

How it fits into the rest of Workday.

Downstream impacts and cross-product interactions.

Security requirements and business process configurations.

Questions and limitations to consider before implementation.

Refer to detailed task instructions for full configuration details.

What It Is

Multiple-element revenue allocation enables you to allocate revenue on customer contracts with multiple performance obligations.

Business Benefits

Multiple-element revenue allocation reduces manual effort and helps to ensure that you report recognized revenue in compliance with:

ASC 606 accounting standards.

IFRS 15 accounting standards.

Use Cases

Use multiple-element revenue allocation to meet reporting requirements when the revenue line amount on the customer contract differs from the contract line amount.

Questions to Consider

Questions	Considerations
When you do your pricing studies, how do you determine the standalone selling price (fair value price) for your sales items?	When your company sells items based on: A percentage of the list price or a discount from the list price, you can configure your fair value price list using a percentage. The average selling price over a period of time, you can configure your fair value price list using an amount. Complex pricing models, you can configure your standalone selling price (SSP) using the dynamic SSP rule builder and revenue allocation rules.
How do you want to allocate revenue for a single customer contract?	To calculate revenue allocation: Automatically, configure SSP (fair value price) lists for each sales item or sales item group on a customer contract line. Workday applies the SSP (fair value) to each line and allocates revenue when you enable multiple-element revenue allocation on the customer contract. Manually, specify SSP (fair value) and revenue allocation amounts for each sales item on a customer contract line.
How do you allocate revenue among multiple customer contracts?	Enable at least 1 customer contract type for linked contracts. You can then associate multiple customer contracts with a single parent contract and allocate revenue among them.
What volume of your customer contracts need multiple-element revenue allocation?	To allocate revenue for: A single customer contract, you can create multiple-element revenue allocation from the related actions menu of an approved customer contract. This method enables you to update range percentages, fair value pricing, revenue override amounts, and exclude lines from the calculation. Multiple customer contracts, you can run multiple-element revenue allocation in mass using a report.

Recommendations

Features	Considerations
Lower and Upper Range Percentages	When you don't create an SSP list or a fair value price list, Workday recommends that you calculate revenue based on a percentage of the sales price.
Allocation Basis	Workday recommends that you use an allocation basis to calculate the relative selling price allocation for each sales item on a customer contract line.
Do Not Auto-Allocate Revenue	When you have a large number of customer contract lines that you want to allocate revenue for, Workday recommends that you: Enable this option in your revenue allocation configurations. Run allocations in mass using a report.
Revenue Allocated	When you create multiple-element revenue allocation outside of Workday, we recommend that you enable this check box to indicate that you've already allocated revenue for the customer contract.

Requirements

You must:

Create sales items that use an accrued or deferred revenue treatment for use in an SSP list or a fair value price list.

Manually enter revenue override amounts for sales item bundles on customer contract lines.

Limitations

Features	Considerations
Sales Items and Sales Item Groups	You can only: Assign sales items to 1 sales item group when the sales item group has a group type of fair value pricing. Include sales item groups that have a group type of fair value pricing in a fair value price list.
Variable Customer Contract Lines	Workday doesn't support prepaid variable customer contract lines with multiple-element revenue allocation. Workday can perform the initial allocation for supported variable customer contract lines, but currently doesn't support automated revenue recognition for allocated lines. Instead, calculate the amount to recognize each period and enter that value as a custom installment amount on the revenue recognition schedule.

Features

Considerations

Sales Items and Sales Item Groups

You can only:

Assign sales items to 1 sales item group when the sales item group has a group type of fair value pricing.

Include sales item groups that have a group type of fair value pricing in a fair value price list.

Variable Customer Contract Lines

Workday doesn't support prepaid variable customer contract lines with multiple-element revenue allocation.

Workday can perform the initial allocation for supported variable customer contract lines, but currently doesn't support automated revenue recognition for allocated lines. Instead, calculate the amount to recognize each period and enter that value as a custom installment amount on the revenue recognition schedule.

Tenant Setup

To define tenant-wide and company-wide configurations, access the

Set Up Revenue Allocation Configuration

task. You can use the task to configure how Workday allocates revenue on customer contracts with multiple-element arrangements.

Security

Domains	Considerations
Process: Advanced MEA Allocation	Create, edit, and delete rules (formulas) for SSP using the dynamic SSP and revenue allocation rule builder. Create multiple-element revenue allocations for applicable customer contracts. Maintain SSP lists.
Process: Customer Contract - View in the Customer Contracts and Project Billing functional areas.	Report on multiple-element revenue allocation.
Process: Revenue - Allocations in the Customer Contracts and Project Billing functional areas.	Create multiple-element revenue allocation for approved customer contracts.
Set Up: Advanced MEA Allocation	Create, edit, and view SSP lists for multiple-element revenue allocations. Create, edit, and delete rules (formulas) for SSP using the dynamic SSP and revenue allocation rule builder.
Set Up: Customer Contracts - Price Lists in the Customer Contracts and Project Billing functional areas.	Maintain and view fair value price lists.
Set Up: Revenue - Allocations in the Customer Contracts and Project Billing functional areas.	Create, edit, maintain, and view fair value price lists. Set up revenue allocation configurations.
Set Up: Sale Item in the Customer Accounts and Learning Core functional areas.	Create and edit sales items.
View: Sale Item in the Customer Accounts and Learning Core functional areas.	Report on sales items.

Business Processes

Business Processes	Considerations
Customer Contract Event	Create and approve customer contracts with multiple-element revenue allocation.
Revenue Recognition Schedule Event	Review and approve revenue override amounts from multiple-element revenue allocations.

Reporting

Reports or Dashboards	Considerations
Carve In/Out report	View multiple-element revenue allocations on your customer contracts.
Create Dynamic SSP and Revenue Allocation Rule report Delete Dynamic SSP and Revenue Allocation Rule report Manage Dynamic SSP and Revenue Allocation Rule report	Create, edit, and delete formulas for SSP using a configurable rule builder.
Fair Value Allocation report	View multiple-element revenue allocations completed for a company.
Fair Value Analysis report	View customer contract lines that fall within the allocation threshold for your tenant.
Maintain Fair Value Price List report	View and edit fair value price lists.
Maintain Standalone Selling Price Lists report	Create, view, and edit SSP lists.
Run Multiple-Element Revenue Allocation report	Run allocations for available customer contracts.
Revenue dashboard	Use this dashboard to access tasks and reports related to multiple-element revenue allocation.

You can use these report data sources to create custom reports:

Customer Contracts

Customer Contracts Lines

Revenue Recognition Schedules

Integrations

Web Services	Considerations
Get Customer Contracts	Retrieves customer contracts with multiple-element revenue allocation enabled.
Get Multiple-Element Revenue Allocations Put Multiple-Element Revenue Allocation	Retrieves multiple-element revenue allocations for customer contracts. Creates and updates multiple-element revenue allocations for customer contracts.
Get Revenue Allocation Configurations Put Revenue Allocation Configuration	Retrieves the current revenue allocation configurations in your tenant. Creates and updates revenue allocation configurations.
Get Sales Items Put Sales Item	Retrieves all the sales items in your tenant. Creates and updates sales items
Get Sales Item Fair Value Price Lists Put Sales Item Fair Value Price List	Retrieves the fair value price list associated with a sales item. Creates and updates fair value price lists.
Get Standalone Selling Price Lists Put Standalone Selling Price List	Retrieves SSP lists. Creates and updates SSP lists.
Submit Customer Contract	Submits customer contracts with multiple-element revenue allocation enabled.

Connections and Touchpoints

Features	Considerations
Customer Contracts	Specify revenue override amounts on customer contract lines. Workday applies the revenue override amounts to the amounts on your revenue recognition schedule.
Financial Accounting	Create revenue recognition operational journals for multiple-element arrangements.

Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.

Setup Considerations: Period End Revenue Accounting

Create Sales Items

Create Fair Value Price Lists

Set Up Revenue Allocation Configurations

Create Customer Contracts

Steps: Link Customer Contracts for Revenue Allocation

Create Revenue Recognition Schedules for Customer Contracts