Understanding the revenue recognition process

Billing offers support for ERP systems by converting the Salesforce CPQ quote to cash data into transactional data. This conversion helps ERP systems to inherit matching data that can be used for accounting functions for general ledger and financial reporting. Salesforce Billing uses several objects to manage the revenue recognition system. Revenue recognition is controlled by accounting standards and can be complex.

For example, revenue for a warranty subscription product of 120 dollars for a period of 12 months can be recognized as 10 dollars a month. Revenue can also be partially recognized. For example, 50% of the revenue can be recognized in full and the remaining 50% is based on the product subscription start date and end date. The revenue recognition process in billing can be automated by configuring the following:

• Revenue distribution method: This defines how billing spreads revenue over a time period.

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