1. Introduction
One of the most
major change in Oracle Fusion Project Portfolio Management (PPM) Cloud compared
to Oracle E-business Suite (EBS) Projects is the shift from Project driven
billing model to a Contract driven billing model.
This new
contract based project billing involves the integration between Oracle Fusion
Project Billing and Oracle Fusion Project Contracts. While Fusion Project
Contracts takes care of the Contract terms, conditions and billing
requirements, the Fusion Project Billing piece handles invoice and revenue
generation & processing.
So contract now becomes
mandatory in Fusion Cloud to do billing and revenue recognition. In EBS, it was optional to use Project
Contracts module and agreements were used in place of contracts.
2. Contract
Structure and its components
A contract in
Fusion Cloud is divided into contract header and contract lines.
2.1 Contract
Header
The header contains
·
Basic contract
information: Contract Number, Name, Description, Start Date, End Date,
Currency, Status, Amount etc.
·
Party information:
Customer and Supplier and their Contacts, Bill-to & Ship-to accounts etc.
·
Billing
Information
The billing
information contains bill and revenue
plans which is a new concept introduced in Fusion Cloud. These are user
defined and contain set of instructions on how to bill and recognize revenue
for a customer.
Bill plans are associated to predefined
billing methods - Amount (Event) Based Invoice, Bill Rate Invoice, Burden
Schedule Invoice, Cost Reimbursable Invoice, Percent Spent Invoice and Percent
Complete Invoice.
Similarly, revenue plans are associated to seeded
revenue methods - Amount (Event) Based Revenue, Bill Rate Revenue, Burden
Schedule Revenue, Cost Reimbursable Revenue, As Billed Revenue, As Incurred
Revenue, Percent Spent Revenue and Percent Complete Revenue.
Availability of such wide range of billing
and revenue methods makes the billing functionality very strong in Fusion PPM
Cloud.
In EBS, the same was done using
Distribution Rules - Event/Work/Cost combinations.
2.2 Contract
Lines
Below
the contract header can be one or multiple contract lines. Each contract line
can select its own bill and revenue
plan combination. This makes it possible to process invoicing and revenue in
different ways by using multiple lines on same contract.
2.3
Project/Task/Funding Association
The
association to project/task and funding also happens at line level making it
possible to implement the various scenarios like One contract- one project, one contract- multiple projects (multiple
lines, one project at each line) and multiple contracts-one project.
In EBS projects, agreements were linked to
projects/tasks in different ways like (One Customer-One Agreement), (Multiple
Customers, One Agreement per Customer), (One customer, Multiple Agreements),
(Multiple Customers, Multiple Agreements per customer).
In Fusion
Cloud, funding is not mandatory for
Project/Task except Percent Spent case. In
EBS, baseline of funding was one of the compulsory steps before one can
generate invoice or revenue.
So fusion cloud project billing offers much
flexibility as compared to a more rigid project-agreement-funding relation in
EBS.
3.
Important New Features
3.1 Bill Set
In Fusion
Cloud, an important and new bill set
feature on bill plan enables the transactions with same bill set number
belonging to different bill plans to be grouped together into a single invoice.
So you can send a single summarized invoice to customer.
3.2 Release Invoice Automatically
In cloud PPM,
now you can release the invoice
automatically by simply enabling a checkbox at the contract header level. So
the invoice gets created in released status directly. In EBS, this was not a standard functionality and Automatic Invoice
Release Extension would need to be written.
4.
Contract Approvals
The contract
approvals can be configured for auto-approval, serial and parallel approvals
using BPM work list in Fusion Cloud.
·
Auto-approval:
To bypass approval and approve automatically
·
Serial
Approval: To go for approval sequentially to a series of people
·
Parallel
Approval: To go for approval to many people in parallel and approved when
all people have approved
5.
Contract Amendments
Contract
amendments is a full-fledged feature in Fusion Cloud. Retroactive contract
amendments are possible using amendment effective date with transactions marked
for automatic adjustments thereby reducing the manual effort. Also the amendments
can follow the same approval workflow as contract.
6.
Project Invoicing
6.1 Draft Invoice Preview/Print
In Fusion
Project Billing, you can preview the
draft invoice and even print the same. So it can be checked in Projects
before sending to receivables for final billing. There are seeded Business
Intelligence Publisher (BIP) reports available to be used directly or you can
create custom BIP reports also.
6.2 Taxation
Another change in
invoicing is on the tax side. In EBS, tax was not calculated on project
invoice. Only when auto-invoice import to AR was done, tax got calculated and
appeared on AR invoice directly.
In Fusion Cloud,
tax calculations can be viewed on project draft invoice itself. The tax rules
are setup in Fusion Cloud Tax and tax code can be included at Contract,
Contract Line, Expenditure Type and Event Type levels. The tax code can be
changed at invoice line when doing invoice review if required.
The process
follows the same route from draft invoice approval, release, and transfer to
receivables and update from receivables after auto-invoice import.
7.
Project Revenue Recognition
7.1 Revenue Processing
On the revenue
side, there is a major change in how revenue is processed in PPM cloud. In Oracle EBS, you could review and release
revenue lines in projects. The draft revenue could be deleted and regenerated
if it is incorrect. In Fusion Cloud,
there is no review/release process now.
7.2 Accounting
On the
accounting side, oracle projects auto-accounting in EBS is totally removed in
Fusion Cloud. Fusion Sub-ledger accounting (SLA) is the only source of
accounting rules now. For project revenue, projects SLA is used to derive the
accounting while for invoices, it is derived from receivables SLA when
accounting is generated for project sourced invoice in receivables.
8.
Conclusion
This is an attempt to
provide an overview of the way contract-project billing takes place in Fusion
Cloud PPM. It also tries to present a relative account with Oracle EBS. There
are fundamental changes, process changes as well as many new features in Fusion
Cloud PPM which effort to make the functionality stronger and more flexible to
handle the complex contractual/billing/revenue recognition needs of customers.