[Subscription billing] Recurring contract billing overview in Microsoft Dynamics 365 finance and operations: Part-1

Subscription billing enables organizations to manage subscription revenue opportunities and recurring billing through billing schedules. Complex pricing and billing models and revenue allocation are easily managed and are billed and recognized at the line level. Multi-element revenue allocation enables allocation of revenue to comply with International Accounting Standards (International Financial Reporting Standard 15 [IFRS 15]) and Generally Accepted Accounting Principles (US GAAP) standards (Accounting Standards Codification Topic 606 [ASC 606]).

The solution has three modules that can be used independently. Alternatively, all three modules can be used together.

  • Recurring contract billing – This module enables recurring billing and price management to provide control over pricing and billing parameters, contract renewal, and consolidated invoicing.
  • Revenue and expense deferrals – This module eliminate manual processes and dependency on external systems by managing revenue and enabling real-time insight into monthly recurring revenue.
  • Multi-element revenue allocation – This module helps with revenue compliance by handling pricing and revenue allocation across multiple items.

You can read more details here

Pre-requisites:

  1. Disable revenue recognition feature
  2. Enable subscription billing module

In today’s blog we will start with recurring contract billing. We will try to understand this with one simple end to end scenario and then we will pick up specific configurations and options available. Why we will start with end-to-end scenario so that later we can understand the impact of different configuration and options available.

Billing schedule group

Billing schedule group can be created for defining default values for the billing schedule which we are going to create.

Let’s start with simple scenario:

USMF provides Dynamics support to a customer US-001 and bill them on monthly basis as 500 USD. This contract is for one year starting from 1st April 2022 top 31st March 2023. While generating billing every month, system should create sales order for Support product (service) and post invoice. Also, USMF should be able to keep track of billing.

Step-1: Create billing schedule

Step-2: Add item and price information, View schedule

Step-3: Generate invoice based on defined schedule

Step-4: View posting

That’s it for this blog, hope this gives you over all idea about recurring billing. Now in next part of blogs we will break down different option line-item type and pricing method.

Thank you!!! Keep reading and sharing!!

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