Finance – Overview of Unearned Revenue, Grace Due and New Features

Unearned Revenue What is the Unearned Revenue report? A process run at Subscriber Fiscal Close to report each subscriber’s ending balance for the period The ending balance is the “unearned revenue” remaining on the subscription as of the end of the fiscal period ‘Unearned Revenue’ is commonly referred to as ‘Subscriber Liability’ The unearned revenue amount is comprised of subscriber payments, adjustments and other transactions that update the Expire Date, that have processed but where the product has not yet been delivered

Unearned Revenue Subscriber payment received on 03/15/2015 for $100 Unearned Revenue example for a new subscriber: Subscriber payment received on 03/15/2015 for $100 Payment processes when the Batch is accepted and Sub Payment Processing is run Processing puts the amount of the payment into the subscriber’s “balance” and updates the GL:

Unearned Revenue Unearned Revenue example for a new subscriber: Subscriber payment received on 03/15/2015 for $100 The payment amount will be converted into Copy Rate By Day (CRbD) amounts based on the subscribers Rate Code/Terms In this example, we’ll say the term is 52 weeks for $100 and the Terms are setup as Percent By Day – 40% Sunday, 10% each Mon-Sat Sunday = 0.769231, Daily = 0.192308 The CRbD amounts will be “earned” as each pub date is processed/ended The subscriber’s Balance will be updated in Customer Services, but the earned amount will not hit the GL until the end of the period

Unearned Revenue Unearned Revenue example for a new subscriber: Subscriber payment received on 03/15/2015 for $100 Sunday = 0.769231, Daily = 0.192308 When UR is run at the end of the period (03/31/2015) the report will show the following for this subscriber: Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 0.00 2.31 2.69 100.00 95.00 Sunday – 0.769231 X 3 = 2.307693 Daily – 0.192308 X 14 = 2.692312 Note – because the CRbD is stored to 6 decimal points, rounding will occur

Unearned Revenue When is Earned Revenue posted to the GL? When Unearned Revenue is run with Update = Yes and Create GL = Yes Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 0.00 2.31 2.69 100.00 95.00

Unearned Revenue Where is the Earned Revenue GL defined? Setup > Accounting > General Ledger > CR GL Account May be defined by day of week

Unearned Revenue Where is the Earned Revenue GL defined? Setup > Accounting > General Ledger > CR GL Account

Unearned Revenue What is the calculation for Earned Revenue?

Unearned Revenue What is the calculation for Earned Revenue? There is a caveat though… The Earned Revenue calculation assumes: There are no issues or errors with the subscriber There are no unprocessed transactions That no activity outside the period has influenced the subscriber balance The Unearned Revenue report will correct any issues within itself, as it must set the Ending Balance to match the subscribers’ current status The Unearned Revenue report cannot be out of balance with itself

Unearned Revenue Subscriber Payment Errors Errors prevent the subscribers Expire from being updated, but the payment amount is still in their “balance” This subscriber has a Copy Rate By Day of $1.00 AutoPay pulled on 02/05/2015 for $28.00, Current Expire – 02/06/2015 The payment is erring and will not process The ending balance for January was 5.00 When run the Unearned Rev report at the end of February we see: Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 5.00 1.00 4.00 28.00 0.00 The Expire has not been updated so there are no days to ‘earn’ from the payment that was made

Unearned Revenue Subscriber Payment Errors The subscriber should look like this on the report: Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 5.00 4.00 24.00 28.00 0.00 The ending balance must reflect was is happening on the subscriber No days/amounts can be ‘earned’ if the payment is not processed, so the report looks like this: Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 5.00 1.00 4.00 28.00 0.00

Unearned Revenue What is the calculation for Earned Revenue? 5.00 28.00 0.00

Unearned Revenue Subscriber Payment Outside the Date Range of the Report A payment outside the period cannot be included on the report A Payment dated 03/01/2015 will not be on a report run for 03/02/2015 – 03/08/2015; this seems obvious But… the payment is part of the subscribers’ balance at the time the report is run Scenario – Unearned Rev is run through 03/01, but Fiscal Close is not processed to close the period. On the evening of 03/01, a payment is made online and is dated 03/01, but will not process until 03/02 This payment is effectively “stuck” between the two reporting periods

Unearned Revenue Subscriber Payment Outside the Date Range of the Report When the Payment falls within the period, we see this: Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 5.00 1.00 6.00 28.00 0.00 26.00 When the Payment is not within the period, we see this: Prior Balance Earned Sunday Earned Other Payments Expire Changes Transfer Grace Paid Refunds Ending Balance 5.00 1.00 -22.00 0.00 26.00

Unearned Revenue Calculation when Payment is within the Period 28.00 5.00 28.00 0.00 26.00 7.00

Unearned Revenue Calculation when Payment is outside the Period 5.00 0.00 26.00 21.00-

Unearned Revenue How does the ‘Payment Outside the Period’ happen? Failure to run Subscriber Fiscal Close Payment Date issues within Lockbox files Non-issue if Fiscal Close has been run Allowing Payments to be back-dated

Grace Due What is the Grace Due report? A process run at Subscriber Fiscal Close to report the value of days delivered after the subscriber’s Expire date There are two flavors of Grace: Subscriber’s currently In Grace Subscriber’s who have completed their Grace period The Grace Due report has two parts Top portion reports subscriber’s that have completed their Grace period Bottom portion reports subscriber’s currently In Grace

Grace Due Grace Due and the GL Subscriber AR is defined within the Publication record Subscriber Revenue is the same GL used by Unearned Rev

Grace Due Grace Due and the GL There are two GL Journal Codes for Grace GraceDue – for subscriber’s that have Ended Grace (top of report) GraceAcc – for subscriber’s currently In Grace (bottom of report) Both Grace Journal Codes use the same GL Accounts GraceDue – hits the GL when the GraceOwed transaction is created on the subscriber (when EndGrace processes) GraceAcc – hits the GL when the Grace Due report is processed with Update = Yes

Grace Due Grace Due Example Subscriber Expired on 12/15/2014 (CRbD = 1.00) Site allows 90 days of Grace, so End Grace date is 03/15/2015 End of December: In Grace amount reports the days in Dec to GraceAcc Journal Code 12/15 – 12/31 = 17 days, so 17.00 hits GraceAcc 17.00 is reversed on 01/01/2015, setting the “balance” back to 0.00 End of January: In Grace amount reports the days in Jan to GraceAcc Journal Code 12/15 – 01/31 = 48 days, so 48.00 hits GraceAcc The net in the GL is 31.00; 48.00 new accrual minus 17.00 reversal from Dec 48.00 is reversed on 02/01/2015, setting the “balance” back to 0.00 Cont…

Grace Due Grace Due Example End of January: 12/15 – 01/31 = 48 days, so 48.00 hits GraceAcc 48.00 is reversed on 02/01/2015, setting the “balance” back to 0.00 End of February: 12/15 – 02/28 = 76 days, so 76.00 hits GraceAcc 76.00 is reversed on 03/01/2015, setting the “balance” back to 0.00 End of March: Subscriber has Ended Grace – the full Grace period hits the Grace Due Journal Code 12/15 – 03/15 = 90 days, so 90.00 hits GraceDue At this point, the subscriber is Perm Stopped

Grace Due What happens when a Payment comes in? If the subscriber is currently In Grace No Grace related activity on the subscriber or in the GL The GraceAcc was reversed the first day of the next period, so the subscribers Grace “balance” is 0.00 Effective Date of Payment will be the subscriber’s current Expire Date (12/15/2014) If the subscriber has Ended Grace GraceOwed will be Paid

Grace Due What happens when a Payment comes in? If the Payment amount is more than the GraceOwed amount

Grace Due What impact does Grace Write-Off have? There are two flavors of Grace Write-Off Write-Off to both Customer Services & GL Grace amounts are moved from Sub AR to Bad Debt GraceOwed transactions are changed to GraceWOff and the Grace balance is set to 0.00 for the subscriber

Grace Due What impact does Grace Write-Off have? There are two flavors of Grace Write-Off Write-Off to both Customer Services & GL Grace amounts are moved from Sub AR to Bad Debt GraceOwed transactions are changed to GraceWOff and the Grace balance is set to 0.00 for the subscriber Write-Off only to GL Grace amounts are moved from Sub AR to Bad Debt Grace amounts are retained in Customer Services The GraceOwed transaction remains, but the GL Write Off Date has been populated

Grace Due What happens when a Payment is received when Grace has been written off to only the GL? Bad Debt Paid Transparent on the subscriber - GraceOwed is set to GracePaid

Grace Due What is Re-Instated Grace Owed? If a Payment pays off Grace and is then cancelled/NSF’d the Grace Owed amount must be put back on the subscriber and in the Sub AR. This Grace Owed amount cannot be considered “new”

Grace Due How does the Grace Due Report work? Unlike Unearned Rev, Grace Due foots as expected

Grace Due How does the Grace Due Report work? Unlike Unearned Rev, Grace Due foots as expected It is possible for a subscriber to be out of balance on the Grace Due report Out of balance subscribers will be indicated with an asterisk on the far right of the report

Grace Due How does the Grace Due Report work? Out of balance subscribers will also be listed in the middle of the report, at the end of the Top portion

Grace Due What issues can Grace Due have? Possible issues are similar to Unearned Revenue Unprocessed and/or erring Payments Processed Payments outside the period Gaps in the date range of the report Start Date must always be prior End Date + 1 Make sure the Biz Rule for gap checking is enabled Reports section – Should an error or warning be generated if a gap in dates I found between the last period and current period?

What’s New?

What’s New? Exports GL Export can omit “Zero” GL transactions BUSINESS RULE: Should general ledger transactions with a zero amount be exported? Statement Export now supports up to 12 age periods

What’s New? Imports A rollup GL Account ID may now be imported within the Chart of Accounts Import

What’s New? CRGL by Account Type CRGL can now be defined by Account Type Account Types are used for Non-Delivery Account setup Ex: Hauler, Contractor, etc.

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