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Revenue Recognition

In Projectworks, you can evaluate project financial performance using two complementary models - Invoicing Basis or Revenue Recognition.

Invoicing Basis vs Recognised Revenue

  • Invoicing basis
    Figures calculated from invoices and invoice forecasts, for example Projected Invoicing and Margin - Invoicing Basis.
  • Recognised revenue
    The revenue you treat as earned for the work done, entered by Budget and month in the Revenue Recognition ledger.

Invoicing Basis Example:

Month 1
A $100,000 Budget is invoiced 25% upfront. That $25,000 is the revenue amount for this budget.

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Revenue Recognition Example:

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September (Month 1)
A $100,000 Budget is invoiced $25,000 upfront. After the first month, 5% of the work has been completed, this equates to $5,000 of Recognised Revenue.

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October (Month 2)
The next month - another 10% of the work has been completed, and no more is invoiced yet. 30% can be entered into the Period % column, which auto-fills the Cumulative % column to show 15% completion overall.

This will recognise $10,000 of revenue for this month.

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How to enable Revenue Recognition

Once this setting is enabled, you’ll have the ability to toggle your Projects between Invoicing Basis and Revenue Recognition as required.

  1. Click the Settings cog in the top right corner.
  2. Click System > Settings.
  3. Click ⋮ on the Enable revenue recognition row, then Edit this setting.
  4. Check Enable revenue recognition and click Update Setting.

This setting applies to your whole organisation. Once it's on, everyone will see these changes:

  • A Revenue tab is added to projects, replacing the Forecasts tab. Here you can toggle to Revenue Recognition to view the ledger.
  • The project Margin tab shows an Invoicing / Recognition toggle.

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How to enter recognised revenue

The Revenue Recognition ledger is a table with a row for each Budget and a set of columns for each month. Each month has three columns: Cumulative %, Period %, and Amount $.

  1. Open the project and go to the Revenue tab.
  2. Toggle from Invoice Forecasts to Revenue Recognition.
  3. Click the cell for the Budget and month you want to update.
  4. Enter a value in Cumulative %, Period %, or Amount $. The system will calculate the other two from the Budget value.
    • If you can’t see the column you want, ensure it’s switched on by clicking Hide/Show/Group.
  5. Changes save automatically.

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How to view margin on a recognised basis 

  1. Open the project and go to the Metrics tab.
  2. Toggle between Invoicing and Recognition.

On a recognised basis, Current Margin - Recognition Basis is recognised revenue to date less actual cost to date.

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Things to Note

  • Negative entries
    Negative entries are supported, for true-ups or reversals of a prior period.
  • Editing window
    You can only add or edit recognised revenue within the same rolling window of recent months that applies to invoice forecasts. Older entries are read-only. There is no lock, unlock, or override for closed periods.
  • Audit log
    Every entry records who created or last updated it.
  • Access
    If you can view or edit Forecasts on a project, you have the same access to its Revenue Recognition ledger. Dollar amounts are hidden if you don't have Can See Dollars.

FAQ/Troubleshooting

What reports are available for WIP and deferred revenue?
There are two reports in Custom Reports. To have them enabled for your organisation, contact our support team at [email protected].

  • Revenue WIP & Deferred Revenue (Project Currency)
    Shows the revenue position as at a selected As of date. You can filter by Company or Project Manager. It includes:
    • Project details: Project #, Project Name, Customer, PM, Office, Currency
    • Financials: Invoiced to date, Recognised revenue to date, Difference, WIP / Accrued income, Income in advance / Deferred revenue, Actual cost to date
    • Margin: Margin - Invoicing Basis and Current Margin - Recognition Basis ($ and %)
  • Revenue WIP & Deferred Revenue (Reporting Currency)
    Includes the same fields as the Project Currency report, converted to your organisation's Reporting Currency.

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I don’t see an option to enable Revenue Recognition for our environment?
Revenue Recognition may not be included as part of your current pricing plan - check out our plans or email our support team at [email protected].