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 Revenue Recognition by Incoming Invoice


You use the method of revenue recognition by incoming invoice if the delivery to the customer is not made by you but by the vendor directly . You can carry out revenue recognition once you have received the incoming invoice from your vendor.The service is considered to have been performed at this point.


To use revenue recognition by incoming invoice, the sales document item must be allocated the following attributes:

  • Service-related revenue recognition (revenue recognition category B)

  • Revenue event incoming invoice (revenue event type A)

Process Flow

You create a contract containing an item with service-related revenue recognition.You specify a revenue event type for the item category of the sales document.The event type determines which event or document leads to recognition of the relevant revenues, in this case event type "A" for the incoming invoice.

The order item contains schedule lines.Revenue lines are created on the basis of the schedule lines and automatically allocated a posting block, since the revenue is not yet linked to a service. The revenue cannot be recognized and is only used as a preview. The revenue amount is determined from the quantity in the schedule line and the price agreed in the conditions.

  • Your vendor receives a purchase order and delivers directly to the customer.

  • The customer confirms receipt of the goods with the vendor (phone call, IDoc).

  • Your vendor sends you an incoming invoice that triggers the revenue recognition process.

    • The incoming invoice updates the item in the sales document, and new revenue lines are created without a posting block.The new lines are based on the quantity invoiced in the incoming invoice.

    • Revenue lines that have been created for the schedule line up to this point (but not posted) are deleted.

  • The block indicator is removed automatically and the posting is made. The revenues are posted on the debit side of the account for unbilled receivables, and the offset posting is made to the credit side of the revenue account.

    The block indicator can be reset manually using the Post Revenues transaction (VF44).

  • Your customer is invoiced via the contract.