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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Delivery Terms and Rev...
Microsoft Dynamics AX (Archived)

Delivery Terms and Revenue Recognition

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Posted on by Rosey

Hi All,

I have inquired about the following a couple times, but have gotten no response, hopefully third times a charm!

My inquiry is about FOB Destination where we would like to have liability for the product until it arrives to the customer...aka we do not want to acquire revenue on the product until the customer actually receives it.  Any way to do this in AX?? More detail below.

FOB does not shift to the customer until either the product is received by the common carrier (in some cases) or when the product ultimately is received by the end customer (I believe most international shipments fall into either of these categories).

 

      • In these cases, we should not earn revenue nor COGS until the risk of loss changes.

      • We should have the option to “pre-bill” upon shipment if it chooses, however it would create Deferred Revenue (liability) and Deferred COGS (asset) at time of billing until the risk of loss & title transfers at a later time.

      • If we bill at the estimated delivery date, then there is no deferred revenue and the transaction would occur as it would at the FOB Shipping Point (finalized).

      • It would make sense to have a “Finished Goods In Transit” site created to ensure that the inventory is segregated when we still own it in transit.

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  • Weaveriski Profile Picture
    Weaveriski 23,616 on at
    RE: Delivery Terms and Revenue Recognition

    Hi Rosey

    In the Item Model group there is a flag called "Post to deferred revenue account on sales delivery". Upon the delivery the system then posts the value as it would at invoice (the transactions are reversed at invoice). My all or nothing is by item with the item model group essentially (I thought it was an AR Parameter, but opening the system I realised it was against the item model group).

    Activate it and then test the process - this will recognise the revenue financially at shipment in the defined deferred revenue account.

  • Rosey Profile Picture
    Rosey on at
    RE: Delivery Terms and Revenue Recognition

    Steven,

    The first part of your response makes sense, and looks like that what we may have to do.  But I have a question, what do you mean by I can create pre-bill at shipment??  And that it is all or nothing?

    Thanks!

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 292,516 Super User 2025 Season 1 on at
    RE: Delivery Terms and Revenue Recognition

    Hi Rosey,

    FOB Destination means that you deliver the goods at a port. In 99% of the cases this is not the Customers destination. So I assume between bringing the goods at the port and when it arrives at the customer, some transportation is needed. With FOB, you don't have to wait until it arrives at the customer; it is not part of your agreement. FOB Destination means you can invoice as the transportation is not your business or risk.

    So I really don't understand your question. Are you mixing up delivery terms? Are you also responsible for the Transportation and Insurance?

  • Rosey Profile Picture
    Rosey on at
    FOB DESTINATION

      • Hi All,

        I have an inquiry about FOB Destination where we would like to have liability for the product until it arrives to the customer...aka we do not want to acquire revenue on the product until the customer actually receives it.  Any way to do this in AX?? More detail below.

        FOB does not shift to the customer until either the product is received by the common carrier (in some cases) or when the product ultimately is received by the end customer (I believe most international shipments fall into either of these categories).

     

        • In these cases, we should not earn revenue nor COGS until the risk of loss changes.

        • We should have the option to “pre-bill” upon shipment if it chooses, however it would create Deferred Revenue (liability) and Deferred COGS (asset) at time of billing until the risk of loss & title transfers at a later time.

        • If we bill at the estimated delivery date, then there is no deferred revenue and the transaction would occur as it would at the FOB Shipping Point (finalized).

        • It would make sense to have a “Finished Goods In Transit” site created to ensure that the inventory is segregated when we still own it in transit.

  • Weaveriski Profile Picture
    Weaveriski 23,616 on at
    RE: FOB DESTINATION

    Leave it as shipped and in goods shipped not invoiced until confirmation of receipt is received from the carrier/customer and then invoice it.  This will means the revenue and COGS is only realised once confirmation is received. You can create pre-bill at shipment if configured, but this is not by FOB destination, it is all or nothing I believe.  

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