NetSuite revenue recognition is one of the most complex modules in the system. Fully understanding the ins and outs can take years of experience. At TAC Solutions Group, our team specializes in helping companies fully understand and utilize Advanced Revenue Management. Troubleshooting can be tricky; in this article, we will dive into potential causes of revenue not being recognized.
First, let's break down the NetSuite revenue recognition flow.
The standard NetSuite flow has five basic steps.
- Transaction is created (Sales Order / Invoice / Subscription)
- Revenue Elements are generated.
- Revenue Arrangement is created.
- Revenue Plans are generated.
- Revenue is recognized in accordance with the rules and schedule.
If revenue isn’t being recognized, the issue is often due to one of these common reasons.
#1: Revenue Arrangements were never created.
This should be the first thing to check: open your sales transaction and find the “related records” subtab. The revenue arrangement must be established for the system to recognize revenue. Open the transaction and look for a revenue arrangement under the Related Records subtab.
If there is no revenue arrangement, common causes are usually because the item record was not populated correctly:
NetSuite revenue recognition not enabled on the item or a missing revenue account mapping= ARM Advanced Revenue Management not triggered.
Possible Fix:
- Verify item setup and make sure these fields are populated:
- Revenue Recognition Rule
- Revenue Recognition Forecast Rule
- Income Account
- If anything is missing, populate and re-run revenue arrangement creation.
#2: Revenue plans failed to generate.
Even with a revenue arrangement, revenue won’t be recognized unless the system creates revenue plans.
To troubleshoot:
- Open the revenue arrangement on the associated transaction.
- Go to the revenue elements subtab.
- Check that “Create Revenue Plans On” is populated.
- Check that revenue plans are present and attached to each line.
Common causes:
- Missing or invalid start/end dates
- Revenue plan creation date in the future
- Allocation issues blocking plan creation
Fix:
- Check:
- Start Date and End Date are populated – this can also be an issue with the revenue recognition rule itself. On the revenue element, open up the “Revenue Recognition Rule”. Check the Start Date Source Type or End Date Source Type; this can tell you exactly why the start/end date failed to populate.
- “Create Revenue Plans On” is less than or equal to today.
- Manually trigger plan creation if needed.
The Rev Rec Start Date Source determines the source of the initial NetSuite revenue recognition start date on the revenue recognition plan.
The options are:
- Arrangement Transaction Date – The date of the revenue arrangement.
- Event Date – The date of the event that triggers the creation of the revenue recognition plan. The event is determined by the Create Revenue Plans On option on the item record.
- Source Date – The date of the source customer performance obligation that generates the revenue element.
- Revenue Element Start Date – The start date on the revenue element record. This date is not generated automatically. You must use this start date source if you want the rule to be included in the list of revenue recognition rules for journal entries.
#3: Elements not being created due to Revenue Field Mapping
Another common issue we’ve seen is when the Revenue Arrangements get created, but the Revenue Elements fail to generate. This usually happens because of the revenue field mapping, which determines how transaction lines create elements. Most commonly, it is due to a source field on the originating transaction that is not populated.
To Troubleshoot:
- Navigate to Set Up > Accounting > Revenue Field Mapping. Here you can view the source fields and how they map to the revenue element target fields. Note the source fields; these will be the first things to check in the source transaction.
- Open the created revenue arrangement.
- Click on the “Revenue Elements” subtab.
- Check each line to identify which ones are missing elements.
- Open the source transaction where a revenue element failed to get created.
- Populate any missing fields that are included in the revenue field mapping.
- Re-run the revenue arrangement creation.
How TAC Can Help
Need Help With ARM?
Advanced Revenue Management is one of NetSuite’s most powerful modules, but it can also be one of the most challenging to troubleshoot. TAC Solutions Group’s team has a certified team with extensive knowledge of configuring, optimizing, and troubleshooting ARM and many other modules. If you’re experiencing revenue recognition issues or want to ensure your ARM setup is up to standard, contact TAC Solutions Group to get started.
