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An account of Contract based Project Billing in Fusion PPM Cloud & its comparison with EBS Projects

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.

 

 

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