Skip to Content

 Home
 Community
 Blogs

 Ask a Question
 Write a Blog Post
 Login / Sign-up
Product Information

Madhusudhan T C
September 11, 2020 17 minute read

Revenue Accounting and Reporting (RAR) |

Concept and Configuration
26 61 51,693

1. Introduction

This blog starts by providing a brief understanding of IFRS (International Financial

Reporting Standard) 15 – Revenue from Contracts with Customers and then lays down how
SAPs RAR (Revenue Accounting and Reporting) solution helps in complying with the same.
Towards the end, lists down some important configurations in SAP RAR (Revenue
Accounting and Reporting).

RAR is also used to comply with ASC 606 – Revenue from Contracts with Customers.

2. Audience

Consultants/Business Users.

3. Purpose

• Understand the concept of IFRS 15 – Revenue from Contracts with Customers

• Understand SAP’s Revenue Accounting and Reporting (RAR)
• Configuration in Revenue Accounting and Reporting (RAR)

4. IFRS – 15: Revenue from Contracts with Customers

Introduction to the Concept

Let’s start with an investment decision scenario. Here we decide which is the best company
to invest in purely based on financial data provided by them.
Below is an excerpt of financial data of two companies in the same line of business;

By analyzing the above data, it is obvious that company B has a good ROI (Return on
Investment) in fact 4.5 times that of company A and is the best place to invest in.

Now we will check some other facts and see if our decision to go with company B will
change?

Other Facts;
• Both Companies had only one contract during the year.
• Company A’s contract is of 10,00,000 and to be delivered in 5 years. Fully invoiced and
amount received upfront. The revenue is recognized only to the extent obligations are
delivered, making it only 2,00,000 for the year.
• Company B’s contract is of 5,00,000 and to be delivered in 5 years. Fully invoiced and
amount received upfront. Revenue is recognized based on the invoicing though the contract is
not fully delivered.

With this new information, it reveals that company A is performing better than the company
B, though the financial figures were misleading. The reason for getting mislead; company B
did not follow the standard accounting principles while recognizing the revenue.

The main purpose why Accounting Standards got framed is to avoid such wrong decision
making based on misleading data.

With Accounting Standards, comparison between two entities is possible when both maintain
the same principle, otherwise proper comparison is not possible. As in our case both
companies observed different accounting principles and the results were extremely
misleading.

IFRS (International Financial Reporting Standard) 15 is one such standard which lays down
the rule to recognize and report Revenue from Contracts with Customers. It specifies how
and when to recognize revenue as well as requiring entities to provide users of financial
statements with more informative, relevant disclosures.

Principles of IFRS 15
Though we will not get into the very details of IFRS 15 – Revenue from Contracts with
Customers, we will understand the crux as SAP’s Revenue Accounting and Reporting (RAR)
is a solution for IFRS 15 requirements.

The main objective of the new standard IFRS 15 is to provide a single, comprehensive
revenue recognition model for all customer contracts, improving comparability within and
across industries and across capital markets.
The principles in the standard will be applied using a five-step model:

 Identify the contract with a customer.

 Identify all the individual performance obligations within the contract.
 Determine the transaction price.
 Allocate the price to the performance obligations.
 Recognize revenue as the performance obligations are fulfilled.

Terminologies
It is also good to know some of the IFRS 15 specific words.

Performance Obligation; A promise to delivery good or service under a contract with a

customer qualifies as a performance obligation if the good or service is ‘distinct’.

Standalone Selling Price; The price at which an entity would sell a good or service
separately to a customer.

Contract Asset; Recognized Revenue is more than the Invoiced Amount.

Contract Liability; Invoiced Amount is more than Recognized Revenue.

Illustrations
Let’s try to understand this 5-step model with an illustration. We will take an example of a
contract from a telecommunication industry, an industry heavily impacted by IFRS 15.

Step 1: Identify the Contract with a Customer

A contract is entered with a customer and following are the terms of the same;
• Device sold under contract at 13,000 INR, with 3 months free data subscription.
• Full amount settled at initiation of the contract.
• Device delivered immediately.
• Data service provided over the contracted period of 3 months.

Step 2: Identify all the individual performance obligations within the contract
This contract has two POBs (Performance Obligations) one delivery of device and the second
one providing of data service over the period of 3 months.

Step 3: Determine the Transaction Price

In this the contract TP (Transaction Price) is 13,000 INR.

Step 4: Allocate the price to Performance Obligations

We have identified 2 POBs in this contract. The transaction price should be allocated
between these 2 POBs in the ratio of their standalone selling price (SSP). As defined in IFRS
15, the SSP is the price at which an entity would sell a good or service separately to a
customer. The SSP for device is 10,000 INR and for the 3 months subscription is 6,000 INR.
Hence, the allocation amount for the Device will be 8,125 INR and for 3 months subscription
will be 4,875 INR.

Step 5: Recognize revenue as the performance obligations are fulfilled

The revenue for the Device POB will be recognized as and when the device is delivered,
which in our case is in the 1st month. Revenue relating to Subscription POB will be
recognized over the period of 3 months equally as and when it gets fulfilled.
At the end of 1st month there will be a Contract Liability of 3,250 INR, as the contract
amount is fully invoiced, and subscription for 2 months is yet to be provided.

Following is the pictorial representation of the illustration narrated above;

We also consider an illustration where in contact asset is ascertained.

5. Revenue Accounting and Reporting (RAR)

Overview
SAP Revenue Accounting and Reporting Component is based on the 5-step model of IFRS
15. In RAR system, data obtained from different source applications are processed to identify
the POB and their recognizable revenue. During the period end, revenue as per IFRS 15 is
recognized along with contract liability / contract asset if any and posted to accounting.
Architecture
Data flow to RAR system from different applications to calculate revenue, contract asset and
contract liability as per IFRS 15. Data can flow to RAR with native integration from SD and
Hybris, and from third party applications using BAdIs.

Following diagram depicts data flow architecture to and within RAR system.

Source Applications
SAP RAR is a standalone application and multiple applications (managing contracts) can be
integrated directly into RAR through the ARL (Adapter Reuse Layer). RAR is compatible
with SAP and Non-SAP applications.

Standard Integration Applications

1. SAP Hybris
2. Sales and Distribution

Third Party Applications

1. Data Hub Approach

In this approach data is gathered from various source systems, staged and processed in a SAP
RAR compatible language before sending it to RAR.

The information flow from source applications to RAR provides details of Order, Fulfillment
and Invoice of a contract. An order creates a contract in RAR, whereas fulfillment and
invoice update an existing contract.

Adapter Reuse Layer

Data received from source applications generate RAIs (Revenue Accounting Items) to pass
the contract information to RAR. SAP applications like SD can be configured to generate
RAIs in ARL (Adapter Reuse Layer) automatically.

RAIs (Revenue Accounting Items) in simple terms can be referred to as common language
understandable by RAR system. Data received from all the source applications generate RAIs
(Revenue Accounting Items).

Once Revenue Accounting Items are created, they need to be processed to create/update RA
Contract and POBs (Performance Obligations).

RAIs (Revenue Accounting Items) can be viewed and processed using RAI Monitor
(Transaction FARR_RAI_MON).
There are typically 3 stages/status in RAI processing; Raw, Processable and Processed.
However, few stages can be skipped with integrated approach.

Each stages/status mean;

Raw: No validation done

Processable: Validation like master data, company code and so on done
Processed: RAI is processed, and corresponding Revenue Accounting Contract is created or
updated successfully.

A RAI is created for each line item (Main Item) and corresponding conditions (Condition
Item) for order, fulfillment and invoice.
Successfully processed RAIs will create/update RA Contracts and POBs based on rules set in
BRF+ (Business Rules Framework).

Once Order RAIs (Revenue Accounting Items) are processed, Contract No. and POB No.
gets updated against each of the RAIs.

Business Rules Framework+

BRF+ is a standalone application and a prominent component in ARL (Adapter Reuse
Layer). BRF+ is used to derive attributes of Revenue Accounting Contract and Account
Determination with predefined business rules. BRF+ acts as an API as well as a User
Interface to define and process business rules.

BRF+ as a standalone application, is not only integrated with RAR but can be integrated with
other SAP applications like CRM, SRM and other custom applications also.

Following BRF+ application templates are delivered by SAP by default;

FARR_AP_SD_PROCESS_TEMPLATE
Template for revenue accounting item classes used for the integration with Sales and
Distribution (SD).

FARR_AP_CA_PROCESS_TEMPLATE
Template for revenue accounting item classes used for the integration of SAP Hybris Billing
(sender component CA).

FARR_AP_CRM_PROCESS_TEMPLATE
Template for revenue accounting item classes used for the integration of SAP Customer
Relationship Management (CRM).

FARR_AP_PROCESS_TEMPLATE
Template for revenue accounting item classes used for the integration of any other sender
component.

FARR_ACC_DETERMINE_TEMPLATE
Template for Account Determination.
Own BRFplus application can be created by copying the appropriate template application
delivered by SAP and maintain installation-specific logic by maintaining the appropriate
decision table entries.

BRF+ applications are assigned in the configuration for POB processing and Account
Determination.

There are Decision Tables in each of these applications for specific purposes which contains
condition columns and result columns. The result column data is identified and sent back to
RAR based on condition columns data received from RAR system.

Following picture depicts input column (in blue) and output columns (in green);

Following are some of the decision tables provided in a BRFplus applications;

1. Updating POB Attributes
2. Getting SSP (Standalone Selling Price) for each POBs
3. Right of Return
4. Account determination for Contract Asset
5. Account determination for Contract Liability
6. Account determination for Recognized Revenue
7. Account determination for Rev. Adj. Allocation
8. Account determination for Deferred Cost

Revenue Accounting Contract and POBs

Revenue Accounting Contracts can be accessed by clicking contract number in RAI Monitor.
Revenue Accounting Contract contains list of Performance Obligations under it along with
detail status of each of the POBs.

Once Fulfillment or Invoicing is done, respective POBs gets updated.

Column ‘Invoiced Amount’ shows POB invoiced till date and column ‘Fulfilled Progress’
shows the status of fulfillment of the POB.

Column ‘Performance Obligation Status’, shows as ‘Completed’ once fully fulfilled and
invoiced, otherwise ‘In Process’.
Calculation of revenue is based on multiple attributes of a POB, which gets partially filled up
by BRF+. Following picture depicts attributes of a POB;

Revenue Accounting Contracts also show Revenue Schedule for each POBs, especially for
Time Based.

Revenue Schedule provides the projection of revenue to be recognized over the period of
contact. It also shows the status of revenue recognized in each period.

Period End Processing

In Revenue Accounting and Reporting (RAR), 3 step period end closing happens.

Step 1 – Transfer Revenue

Purpose: Identifies the revenue to be recognized at the end of the specified period. However,
doesn’t post any accounting entries.
SAP Path: Revenue Accountant > Revenue Posting > Transfer Revenue

By clicking on Transfer, a background job gets created.

The status of the job can be checked using Revenue Posting Jobs Monitor.

SAP Path: Revenue Accountant > Revenue Posting > Revenue Posting Jobs Monitor

Step 2 – Calculate Contract Liabilities and Assets

Purpose: Calculates Contract Asset or Liability at the end of the specified period. However,
doesn’t post any accounting entries.

SAP Path: Revenue Accountant > Revenue Posting > Calculate Contract Liabilities and
Assets

By clicking on Transfer, a background job gets created.

The status of the job can be checked using Revenue Posting Jobs Monitor.
SAP Path: Revenue Accountant > Revenue Posting > Revenue Posting Jobs Monitor

Step 3 – Revenue Posting Run

Purpose: Posts accounting documents based on the calculation done in earlier steps.

SAP Path: Revenue Accountant > Revenue Posting > Revenue Posting Run

By clicking on Post, a background job gets created which will post accounting documents.
Before posting, simulation can be done to verify the entries.

The status of the job can be checked using Revenue Posting Jobs Monitor.

SAP Path: Revenue Accountant > Revenue Posting > Revenue Posting Jobs Monitor

Accounting Entries
Accounting entries gets posted from RAR during the period end processing in step 3. We
shall consider the following scenario as the basis to understand the accounting entries;

Step 1: Invoice Posting

Following will be the accounting entry posted during billing/invoicing. There is no role of
RAR in this entry;

Step 2: Invoice Correction (RAR) (Reversal of Invoice)

This is an entry from RAR which reverses the revenue recognized in Step 1. By this it
nullifies the revenue posted earlier and with subsequent entries RAR will post actual revenue
as per IFRS 15;

Step 3: Recognize Revenue (RAR) (Upon Fulfillment)

With this set of entries, RAR recognizes revenue as per IFRS 15. However, it first posts the
Transaction Price and then adjusts it with the allocation effect. The result is nothing but the
allocation of the POB for the period;

Step 4: Contract Assets and Liabilities (RAR) (Balance in Receivable Adjustment)

With this entry Contract Asset/Liability is posted;

 
6. Configuration

IMG path for RAR configuration can be accessed by Transaction FARR_IMG.

In this section some of the important configurations are highlighted. Please note the
configurations here mentioned are not exactly the way it is arranged in FARR_IMG but have
been put in line with the concept/flow discussed in the earlier section.

Source Applications
Step 1: Sender Component
As discussed earlier, RAR can support multiple source applications. The source applications
are defined as sender component.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Item
Management – Define Sender Components

Sender Component is assigned to logical system and source document item types.

Step 2: Logical System

Define logical systems from which revenue accounting retrieves source items.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Item
Management – Define Logical Systems

Step 3: Source Document Item Types

The information flow from source applications is in the form of Order, Fulfillment and
Invoice of a contract. These are defined as Source Item Types.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Item
Management – Source Document Item Types

Adapter Reuse Layer

Step 1: Interface Components
This configuration activity provides access to the interface components that can be used when
defining revenue accounting item classes.

SAP provides preconfigured interface components that can be used immediately. These
include basic components, which are mandatory for each record type, as well as other
optional components which can be added to a Revenue Accounting Item Class.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Items –
Define Interface Components

Assign Structures, Prerequisite Components and Program Enhancements. Also define Key
Fields and assign Components to Class Type and Record Type.

Step 2: Maintain Revenue Accounting Item Classes

Define revenue accounting item classes and their technical attributes. For each Revenue
Accounting Item Class, it is required to define:
• The interface that you use to transfer revenue accounting item information to the system.
• The data store to be used for the revenue accounting items
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Items –
Maintain Revenue Accounting Item Classes
 Custome
r fields can be added to the RAI structures / Revenue Accounting Item Classes

Step 3: Generate Interfaces for Revenue Accounting Item Classes

Generate the runtime objects resulting from the Revenue Accounting Item configuration.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Items –
Generate Interfaces for Revenue Accounting Item Classes

Step 4: Assign Upload Rules to Revenue Accounting Item Classes

Define behavior of revenue accounting item class during upload. It can be;
1. Create RAI as Processable Item. Consistent items are created as processable items and
Erroneous items are created as raw revenue accounting items.
2. Create RAI as Raw Item. Consistent items and erroneous items are created as raw revenue
accounting items.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Items –
Assign Upload Rules to Revenue Accounting Item Classes

Step 5: Define Exemption Reasons for Revenue Accounting Items

We can exempt revenue accounting items from processing. In this configuration define the
reasons for so and can specify whether the item can be restored or not.

This comes handy if there are issues with the Customizing or the item may be corrupt. The
system then moves these items to a separate table which excludes them from ordinary
processing.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Item
Management – Define Exemption Reasons for Revenue Accounting Items

Step 6: Define Restoration Reasons for Revenue Accounting Items

Define restoration reasons to restore Revenue Accounting Items that are exempted with an
exemption reason. Once restored, they can be further processed in RAI monitor.
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Item
Management – Define Restoration Reasons for Revenue Accounting Items

The option to Exempt or Restore RAI is available in Revenue Accounting Items monitor.

Business Rules Framework+

Step 1: Revenue Accounting Item Classes
BRF+ applications assigned to RAI classes to add business rules while creating/updating RA
Contract and POBs (Performance Obligations).
SPRO Path : Revenue Accounting – Inbound Processing – Revenue Accounting Item
Management – Assign BRFplus Applications to Revenue Accounting Item Classes

Step 2: Account Determination

Assign BRF+ application for account determination and FI postings.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Assign BRF+
Applications to Revenue Accounting Processes
Revenue Accounting Contract and POBs
Step 1: Accounting Principle-Specific Settings
Maintain different accounting treatment and presentation specific to Accounting Principle.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Configure Accounting
Principle-specific Settings

Assign Company Codes to Accounting Principles.

SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Assign Company
Codes to Accounting Principles

Step 2: Open and Close Revenue Accounting Periods

Configure whether an accounting period is open for revenue accounting related transactions.
The settings in this activity provide a revenue accounting perspective of period closing. This
is more of a periodic activity.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Open and Close
Revenue Accounting Periods

Step 3: Number Ranges

Number Ranges – Contracts
Maintain number ranges for Revenue Accounting Contracts.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Number Ranges –
Define Number Ranges for Contracts

Number Ranges – Performance Obligations

Maintain number ranges for Performance Obligations (POBs).
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Number Ranges –
Define Number Ranges for Performance Obligations

Number Ranges – Run IDs

Maintain number ranges for Performance Obligations (POBs). Run IDs are reference
numbers that the system uses to track background jobs created for revenue postings.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Number Ranges –
Define Number Ranges for Run IDs

Step 4: Define Contract Categories

Define contract categories and assign number ranges to them.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Define Contract
Categories

Step 5: Define Performance Obligation Types

Define performance obligation types and their associated attributes. POBs can also derive
their attributes using BRF+ application.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Define Performance
Obligation Types

Step 6: Condition Types

Maintain settings relating to condition types.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Condition Types

Define Reserved Condition Types

Define Condition Types Not Requiring Allocation

Define Roles for Condition Types

Step 7: Define Fulfillment Event Types

Different event types can be defined to recognize fulfillment. As per IFRS 15, revenue is
recognized upon fulfillment.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Define Fulfillment
Event Types

Step 8: Change Message Control

Configure how the system handles certain messages for Revenue Accounting.
SPRO Path : Revenue Accounting – Revenue Accounting Contracts – Change Message
Control
 

Period End Processing

Step 1: Define Posting Specifications for General Ledger Transfer
Maintain RAR posting related configuration like Posting Key, Document Type, Transfer
Account for Document Splitting, Profit Center and so on. FI documents posted during period
end processing will be based on this configuration.
SPRO Path : Revenue Accounting – Revenue Accounting Postings – Define Posting
Specifications for General Ledger Transfer

Step 2: Configure Account Determination for Specific Transactions

This configuration allows to define rules that system uses to determine the accounts to make
certain revenue-related postings. It can also be maintained in BRF+ application directly.
SPRO Path : Revenue Accounting – Revenue Accounting Postings – Configure Account
Determination for Specific Transactions

Hope you find this blog helpful.

This blog does not cover full functionality of SAP RAR. Please refer SAP Help for more
insights.

Assigned Tags

 SAP Revenue Accounting and Reporting

 rar

 Summary of the features and functionality of SAP Revenue Accounting and

Reporting (RAR) - Updated for RAR 1.3

By Pete GrahamJul 28, 2016

 Overview of the Deployment Options for IFRS 15 / ASC 606 Projects for SAP
Customers
 By Pete GrahamAug 09, 2017

 Do you have any silver bullets for IFRS 15 / ASC 606?

By Pete GrahamAug 09, 2017

 Errors in RAR Contracts.

By Mahesh KumarMay 03, 2021

 Revenue Accounting and Recognition (RAR) for Customer Configuration Steps

By Rajendra RaoMar 09, 2020

 SAP RAR update data directly to RAIs tables

By Former MemberJun 14, 2017

SAP TechEd

Tune in for tech talk. Stay for inspiration. Upskill your future.

SAP BTP Learning Group

 SAP Business Technology Platform Learning Journeys.

Coffee Corner

Join the new Coffee Corner Discussion Group.

26 Comments
You must be Logged on to comment or reply to a post.

Vinay Dhamnani
September 11, 2020 at 8:39 am

Very well explained Madhu. Thanks for sharing.

 Like 0
 Share

Sandip Kurewar
September 11, 2020 at 9:11 am

Very well explained sir, I have one question regarding RAR.

What are the basis components are required to activate the RAR.

 Like 1
 Share
Madhusudhan T C
Blog Post Author
September 11, 2020 at 10:01 am

Thanks Sandip 🙂

Unfortunately, I am not aware of Basis components required to activate RAR.

 Like 0
 Share

Sandip Kurewar
September 11, 2020 at 1:07 pm

I got the answer,thank you.

Software component version REVREC 130. Instance Revenue Accounting needs at least an
SAP ERP 6.0, Enhancement Package 5 environment and is compatible with all higher
Enhancement Package Stacks. Instance Revenue Accounting always needs to be installed on
top of your Financials system.

 Like 1
 Share

JagadishKumar Bhumireddy
November 20, 2020 at 3:33 pm

Hi Madhu,

I heard that it is in built in S4HANA 1909 and don't need any add-ons. Is that correct? Could
you please share if you have any information on this?

Thanks...

 Like 0
 Share

Jagadheeswara R J Badabagni
May 25, 2021 at 1:14 am
Hi Madhu

Indeed it is a great blog on RAR. I have a providers contract and if I want to create a 100000$
as the total contract value and if I want to recognize  every year if I want to recognize 10000$
as revenue every year  how will I make it happen at the contract level? Do I need to make a
configuration change for this integration to happen automatically.

 Like 0
 Share

Vineek Gopan
September 11, 2020 at 1:07 pm

Very well explained Madhu..Nice blog

 Like 0
 Share

Minakshi Karan
October 1, 2020 at 8:30 pm

Hi Madhusudhan,

Very well written and well-explained blog on RAR.

Thanks.

 Like 0
 Share

leonardo francisco
October 21, 2020 at 6:14 pm

Hi Madhusudhan T C

I make the configuration of the RAR with SD but i have one problem about the BRF+.
In Decision Table DT_PROCESS_POB i put deferral method T(|Time Base) but is necessary
to use start date how i make this configuration to use some data from Order?

Best Regards

Leonardo

 Like 0
 Share

RSSV Prasad Atmakuri

October 22, 2020 at 5:09 am

HI Leonardo,

Please check what is the POB start date you have mentioned as a part of your configuration.

You can mention as POB start date as contract start date. This would help you

Regards

Prasad

 Like 0
 Share

Mandeep Singh Grover

October 22, 2020 at 7:02 pm

Thanks for sharing Madhu and very well explained..!!

 Like 0
 Share

Sajitha Sahajan
November 16, 2020 at 3:43 pm
Good overview Madhu! Very helpful.

 Like 0
 Share

Govindasamy Bhaskaran
November 29, 2020 at 1:48 pm

Hi Madhu,

Very useful and good blog with steps.    Thanks for sharing.

Bhaskaran G

 Like 0
 Share

Micheal Mathews
March 15, 2021 at 11:35 am

Hi Madhusudan,

Thanks for sharing the document it is very well explained. I was looking out for this
configuration since a very long time.

 Like 0
 Share

Maitray vaidya
March 29, 2021 at 11:01 am

Dear Madhusudhan,

Thanks for the great article.

I have a quick clarification :

1. Can we activate SAP recognition based on event such as "shipment end" (VTTK-
DATEN) status instead of goods issue ?
 2. Currently we are on SAP ver ECC 6 EhP 8. I understand once the SAP RAR activated
we can't able to reverse it right?

Appreciate your response.

 Like 0
 Share

RSSV Prasad Atmakuri

May 3, 2021 at 3:28 pm

Hi Maitray vaidya

Let me answer your questions.

1. SAP has given some standard out-of-box fulfillment event types, anything beyond this
would be creating your own custom fulfillment types. I think the shipment end is not
part of the standard fulfillment type. so this needs to be done by creating your own
fulfillment type.
2. Yes, The understanding is correct.

Thanks & Regards

Prasad

 Like 0
 Share

Haranadh Kanamarlapudi
April 14, 2021 at 5:13 pm

Excellent document and very well detailed

 Like 0
 Share
Lauren Zhang
April 21, 2021 at 1:59 am

Hi Madhusudhan T C

Could you please let me know what going on with RAR in the S4 Hana Cloud?  I see cloud
version has some of the RAR revenue Recognition set up. However, the process or config is
much simple.  In Cloud, it is called Revenue recognition configuration.  Is it diff thing that
RAR , or it is similar(i saw some posting function is the same as rar is trying to do).  If there
is still RAR in Cloud, anything diff from on premises? Any information or link you could
share would be great.

 Like 0
 Share

Prab Gow
July 26, 2021 at 11:27 pm

Very nicely done Madhu. Thanks for sharing your knowledge in a simplistic way.

 Like 0
 Share

Sneha Chudasama
August 10, 2021 at 12:22 am

Hi Madhusudhan T C

Thank you for sharing your knowledge.

Could you please help to understand Cost Recognition and Profit Sharing scenarios with
RAR ?
Thanks in advance.
Sincerely,
Sneha

 Like 0
 Share

Sunil Gopala Krishnan

September 1, 2021 at 2:35 pm

Hello Sir,
 

We wanted to request your help. Once RAI has been created for the sales order item, we want
to stop user from changing the price in sales order item. Which userexit/BADI can I use?
When the user changes the price in sales order for the item that has RAI created, then we
wanted the system to check if RAI exists. If yes, then given pop up message to user stating
that RAI has been created for this item in RAR and hence no change is possible. Is there
userexit/BADI for it where we can add this validation logic?

Thanks,

Sunilkumar Gopalkrishnan

 Like 0
 Share

Dhanalakshmi Kumar
September 16, 2021 at 7:04 am

Hi Madhu,

Very nicely explained with full concept of RAR.

Thanks

Dhana

 Like 0
 Share

Karthick Srinivasan
January 19, 2022 at 4:35 am

Hi Madhu,

Very nice and clear details. Thanks for the blog.

Is there a straight forward way to get the list of tables involved in RAR.

Thanks,
Karthick Srinivasan

 Like 0
 Share

Harald Alten
February 6, 2022 at 3:13 pm

Hello Madhu,

Your article is very nice and comprehensive. The only thing where I struggle with is at the
beginning: I do not get the point why Company B's situation is unfavorable. Could you please
explain me what you mean with "Revenue is recognized based on the invoicing though the
contract is not fully delivered." The only difference between A and B which I see is that A
goes with the delivered POBs whereas B's revenue recognition goes along with the invoicing.
This can be advantageous if the customer accepts the invoicing.

Best regards,

Harald / Germany

 Like 0
 Share

Madhusudhan T C
Blog Post Author
February 7, 2022 at 8:03 am

Hi Harald,
Thanks for your comments.

From company's perspective getting revenue upfront is advantageous only.

From external/investor's perspective, recognizing revenue as and when invoiced may be

misleading (if POB is not fulfilled during the reporting period) because you are recognizing
revenue for something which has not been fulfilled. In the first reporting period there will be
good profit as revenue/invoicing has hit the P&L. But, in subsequent period when there is
actual fulfillment of POB, only cost will hit the P&L resulting in loss. There is no matching
between revenue and cost associated.

This will make it difficult for the investors to evaluate the company and its performance.
Hope this clarifies.

Thanks,

Madhusudhan

 Like 0
 Share

Krishna Moorthy
May 30, 2022 at 9:02 am

Dear Madhusudhan T C,

It is really excellent article to understand  basic concept of RAR for beginner and thanks for
your time and efforts dedicated to this article. We wish to continue your effort on this topic.

Thanks.

V.Krishnamoorthy

 Like 0
 Share

Find us on









 Privacy
 Terms of Use
 Legal Disclosure
 Copyright
 Trademark
 Cookie Preferences
 Newsletter
 Support