Expense Feature Overview

Overview

RevRec’s Expense feature supports expense recognition for ASC 606 contract costs which are incremental expenses related to either obtaining or fulfilling a sales contract. Additionally, RevRec supports expense recognition for other costs that are not directly related to a contract but could be a part of the cost of goods sold (COGS). The expense recognition feature classifies the costs into two distinct types as defined below:

Contract Costs: This is the incremental cost that is specifically incurred to obtain or fulfill a sales contract, such as commission, or certain specific due diligence cost that only occurs when a contract is going to be signed or fulfilled.
Other Costs: These include costs that are not directly linked to obtaining or fulfilling a contract.

RevRec currently supports two methods for expense recognition – Ratable and Point-in-time. RevRec also allows you to follow the revenue recognition of the product for the associated expense and allocates the expense to all products in the contract.

Notes

Foreign currency translation for expense are not supported yet. Users can provide the expense input data in the home currency for foreign currency transactions and RevRec can recognize the expense directly in the home currency - for example, for commission expenses with orders transacted with foreign currency.
The input data for expense can be provided either through RevRec’s Excel-based bulk upload template or manually added through web UI.

Please contact revrec-support@chargebee.com to enable RevRec's Expense feature.

Using Expense Feature

Leveraging the Expense feature in RevRec requires a few steps:

Configure the expense recognition rules and GL accounts. Expense recognition rules include the recognition method and the term. You can define this in a variety of ways, for example by product, or expense code. GL configuration lets you define how you want to book the expense journal entries.
Provide the expense data. You can add the expense data in RevRec through the application User Interface (UI) or bulk upload.
Review results and post accounting entries. You can review results across the expense and accounting journal entry reports and post the accounting journal entries to your accounting system.

Updated on: 06/07/2022