Setup Considerations: Period End Revenue Accounting
You can use this topic to help make decisions when planning your configuration and use of period end revenue accounting. 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
Period end revenue accounting enables you to create reclassification adjustments for deferred revenue balances on a customer contract. You can use period end accounting to adjust deferred revenue balances to zero when your company has:
- Deferred and accrued revenue adjustments deriving from multiple-element arrangements with revenue allocations.
- Foreign exchange gain or loss adjustments deriving from foreign currency customer contracts.
Business Benefits
Workday automates the accounting reconciliation process and improves reporting with period end accounting by enabling you to create reclassification adjustments for deferred revenue balances. Creating reclassification adjustments ensures that you properly relieve deferred revenue balances at the end of a customer contract term.
Use Cases
Use period end accounting to:
- Calculate the difference between billing and revenue recognition amounts that have different exchange rates.
- Reclassify deferred and accrued revenue balances for customer contracts that have multiple-element revenue allocations.
- Post operational journals for deferred, accrued, and asset and liability reclassifications.
Questions to Consider
Subjects | Questions | Considerations |
|---|---|---|
Carve In/Carve Out Adjustments | How do you reclassify deferred and accrued revenue balances for customer contracts that have multiple-element revenue allocations? | You can create carve in/carve out adjustment journals to reclassify deferred and accrued revenue balances. |
Carve In/Carve Out Adjustments | Where do your operational journals for deferred revenue reclassifications post? | Workday creates operational journals for deferred revenue among customer contract lines.
When you use the same Deferred Revenue ledger account for each customer contract line, the journal posts to the same ledger account. |
Carve In/Carve Out Adjustments | Where do your operational journals for accrued revenue reclassifications post? | Workday creates operational journals for unbilled receivables among customer contract lines.
When you use the same Unbilled Receivables ledger account for each customer contract line, the journal posts to the same ledger account. |
Carve In/Carve Out Adjustments | Which ledger accounts do you debit and credit for carve in/carve out adjustments? | Carve in/carve out adjustments impact these ledger accounts:
When the adjustment results in a:
(Optional) You can configure dimensions in the account posting rules for Workday to use when creating operational journals. Example: For the Deferred Revenue and Unbilled Receivables account posting rules, you can configure Customer Group or Project Hierarchy. You can also configure custom organization and custom worktag dimensions. |
Foreign Currency Adjustments | How do you account for foreign currency gain or loss amounts on a customer contract? | When there are billing and revenue recognition discrepancies due to conversion rates, you can create foreign currency adjustment journals to calculate the difference. |
Foreign Currency Adjustments | Which ledger accounts do you debit and credit for foreign currency gain or loss? | Foreign currency adjustments impact these ledger accounts when you enable realized gain or loss as the offset account posting rule in the foreign currency adjustment rules:
When the adjustment results in a:
(Optional) You can configure dimensions in the account posting rules for Workday to use when creating operational journals. Example: For the Deferred Revenue and Unbilled Receivables account posting rules, you can configure Customer Group or Project Hierarchy. You can also configure custom organization and custom worktag dimensions. |
Foreign Currency Adjustments | Which ledger accounts do you debit and credit for foreign currency revenue? | Foreign currency adjustments impact the Revenue ledger account when you enable revenue as the offset account posting rule in the foreign currency adjustment rules.
When the adjustment results in a:
(Optional) You can configure dimensions in the account posting rules for Workday to use when creating operational journals. Example: For the Deferred Revenue and Unbilled Receivables account posting rules, you can configure Customer Group or Project Hierarchy. You can also configure custom organization and custom worktag dimensions. |
Customer Contract Asset and Liability Reclassifications | Where do operational journals for customer contract asset and liability reclassifications post? | When the customer contract has more revenue recognized than billed, Workday creates operational journals that:
Workday also reverses the operational journal on the first day of the next period. |
Recommendations
When many customer contracts require foreign currency adjustments, Workday recommends that you schedule the creation of adjustment journals to reduce manual effort.
Requirements
Features | Considerations |
|---|---|
Account Posting Rules | To configure account posting rules for foreign currency adjustments, create customer contract foreign currency adjustment rules. |
Customer Contract Lines | When you create a multiple-element arrangement, you must have at least 2 customer contract lines with a deferred or accrued revenue treatment. |
Limitations
Features | Considerations |
|---|---|
Accounting Periods | You can only create period end adjustments for open ledger periods. |
Linked Customer Contracts | Workday excludes parent customer contracts and linked customer contracts from adjustments when:
Workday doesn't support parent customer contracts or linked customer contracts on asset and liability reclassification journals. |
Prepaid Customer Contracts | With period end revenue accounting, Workday:
|
Variable Line Customer Contracts | Workday excludes all customer contracts with variable line types from carve in/carve out adjustments. |
Customer Contract Asset and Liability Reclassification Journals | When you rerun the reclassification process, Workday cancels existing reclassification journal entries for the company, year, and period when the process completes.
When you enable the business process, Workday cancels the reclassification journal entries when you complete the final approval. |
Worktag Balancing | Workday doesn't support worktag balancing for carve in/carve out adjustment journals. |
Tenant Setup
In the Customer Contracts Options section on the
Edit Tenant Setup - Financials
task, select the Include Closed Revenue Recognition Installments in Period-End Revenue Accounting
check box to include closed installments in the total revenue recognized amount calculation.Security
Domains | Considerations |
|---|---|
Process: Billing Schedule - Core in the Customer Contracts and Project Billing functional areas. | Create billing schedules for customer contracts. |
Process: Revenue - Adjustments in the Customer Contracts and Project Billing functional areas. |
|
Reports: Financial Accounting in the Financial Accounting functional area. | View reports for ledger details. |
Set Up: Revenue - Adjustments in the Customer Contracts and Project Billing functional areas. |
|
Set Up: Tenant Setup - Financials in the System functional area. | Include closed revenue recognition installments in the total revenue recognized amount calculation. |
Business Processes
Business Processes | Considerations |
|---|---|
Carve In Carve Out or Foreign Currency Adjustment Journal Event
| Create and approve carve in/carve out and foreign currency adjustment journals. |
Customer Contract Asset and Liability Reclassification Journal Event
| Create and approve customer contract asset and liability reclassification journals. |
Customer Contract Event
| Create and approve customer contracts. |
Revenue Recognition Schedule Event
| Create and approve revenue recognition schedules. |
Reporting
Reports | Considerations |
|---|---|
Customer Contract Asset and Liability Reclassification Lines for Contract Lines
| View and drill into asset and liability reclassification lines for customer contract lines. |
Find Carve In/Carve Out Adjustment Journals
| View and drill into carve in/carve out adjustment journals. |
Find Carve In/Carve Out Adjustment Runs
| View and drill into carve in/carve out adjustment runs. |
Find Customer Contract Asset and Liability Reclassification Journals
| View and drill into asset and liability reclassification journals for customer contracts. |
Find Customer Contract Foreign Currency Adjustment Journals
| View and drill into foreign currency adjustment journals for customer contracts. |
Find Customer Contract Foreign Currency Adjustment Runs
| View and drill into foreign currency adjustment runs for customer contracts. |
Find Journals
| View journals by year and period. |
Intercompany Payables and Receivables Reconciliation
| View intercompany transactions associated with carve in/carve out adjustment journals for on-behalf intercompany contracts. |
Ledger Detail
| View a summary of ledger balances by year and period. |
View Customer Contract Foreign Currency Adjustment Rule
| View foreign currency adjustment rules for customer contracts. |
You can use these report data sources to create custom reports that display adjustment information:
- Carve In Carve Out Adjustment Lines
- Customer Contract Adjustment Runs
- Customer Contract Adjustments
- Customer Contract Asset and Liability Reclassification Line for Contract Lines
- Customer Contract Asset and Liability Reclassification Lines
- Customer Contract Fx Adjustment Lines
Integrations
Web Services | Considerations |
|---|---|
Put Ad Hoc Project Transaction
| Use to include closed billable transactions in the total billed amount calculation. |
Put Usage Based Transaction
| Use to include closed billable transactions in the total billed amount calculation. |
Submit Billing Schedule
| Use to include closed billing installments in the total billed amount calculation. |
Connections and Touchpoints
Features | Considerations |
|---|---|
Customer Contracts | Create revenue recognition schedules for period end accounting. |
Financial Accounting | Create operational journals for period end accounting. |
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.