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Dynamics 365 Community / Blogs / Dynamics GP Support and Services Blog / Smooth Revenue option in Mi...

Smooth Revenue option in Microsoft Dynamics GP Contract Administration

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Angela Eckman Ebensteiner Profile Picture Angela Eckman Ebens... 1,218

Hi Everyone,

 

I thought I would share some information on Contract Administration around Shared Revenue as there doesn’t seem to be a lot of information out there and I’ve had a few questions on it lately. 

 

This option can be found on the Contract Entry window under Field Service > Transactions > Contract Administration > Contract Entry/Update

Smooth-Revenue.png

If you ever wondered why sometimes it checks by default or if you can uncheck it later?  Well, here is a little information that helps clear the mystery surrounding that feature. 

 

The Smooth Revenue checkbox allows you to determine whether contracts will recognize revenue based on whole or pro-rated periods.  This option does not apply to those contracts whose Contract Start date is the first day of a month, as those contracts never pro-rate the revenue that is recognized (See screenshot example above).  So, this is really the reason why its marked verses not marked automatically.  

 

More info on that feature:

For example, assume a 12-month contract has a contract start date of May 24th and there is a single line item on the contract for $600.  If the Smooth Revenue checkbox were not marked, a total of 13 periods of revenue would be recognized.  This would include one pro-rated period in May for $12.00, 11 full periods for June through April for $50.00 each and a final pro-rated invoice for the following May for $38.00.  The calculation for non-smoothed revenue is as follows:

 

  • ((Days contract active in month/Days in the month) X Monthly revenue) = 1st periods revenue
  • (Monthly revenue) = 2nd period to next to last period revenue
  • (Contract line total – Sum of all previous periods revenue) = Last periods revenue

 

However, if the Smooth Revenue checkbox has been marked a total of 12 full periods (May through April) for $50.00 each would have been recognized.  The calculation for smooth revenue is as follow: 

  • (Contract line total/ ((Number of partial fiscal periods)-1))

 

Once a contract has been billed or revenue has been recognized, the Smooth Revenue checkbox can no longer be changed. 

Hope this helps you understand a little more about the Smooth Revenue checkbox feature!

Warmest Regards,

Angela Ebensteiner | Sr. Technical Advisor | Microsoft Dynamics GP 

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