Revenue & Expense Recognition on PO Product Receipt

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Posted on by CU09061354-0

Has anyone encountered when using the subcontract feature in Project Operation, where the subcontract expense is used for Revenue Recognition Percentage but the Expense does not clear out of WIP when revenue recognition is ran? Our Project uses subcontractor expenses for labor. The subcontract labor is setup as an item (non-stock). When we receive the PO, the receipt amount is used to calculate revenue on the fixed fee project but the amount that is recorded to WIP on the PO receipt is not expensed out of WIP to expense.

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Dynamics 365 Finance

Dynamics 365 Project Operations

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Giorgio Bonacorsi 3,530 on at

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Hello,

Interesting. Could we have some screenshots of our document entry (agreement, PO) and the voucher?
As far as I know, revenue recognition is now based on the Subscription Billing module. Are you using this module or the previous solution (revenue recognition module). You can leverage it to handle subcontractors, the revenue is recognized based on the terms entered in the subscription agreement lines.

Thank you,
Giorgio

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Preethi V 38 on at

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Hi,

In Project Operations, for fixed-price projects, cost recognition and revenue recognition are handled separately.

The revenue recognition process uses project costs to calculate the percentage of completion, but it does not necessarily mean that the related subcontract WIP will automatically be relieved to expense during the same process.

Could you share screenshots of:

Project group setup

Cost and revenue profile

PO receipt voucher

Revenue recognition voucher

This would help determine whether the issue is related to standard project accounting setup or a specific subcontract posting scenario.

Thanks

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CU09061354-0 8 on at

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@Preethi V,

We opened a ticket with Microsoft and unfortunately they said it is working as designed. In order for Project Ops to Recognize both cost and expense, the invoices have to have been processed. This is unfortunate because, the receipt of the PO is recognizing WIP Dollars and is being used to calculate Percent Complete Revenue Recognition but the costs aren't coming out of WIP. At month-end, they may not have been invoiced from the vendor yet. It is a poor design in my opinion

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