Getting Started: Managing Revenue

Maxio Platform automates your revenue recognition schedules to ensure GAAP compliance, reduce the risk inherent in manual processes, and pass your audit with flying colors. The system generates revenue recognition schedules as a by-product of creating Transactions by using the transactions' amounts, dates, and recognition methods. Therefore, you will likely need to work with the associated Transaction if you need to edit a revenue schedule or make another revenue-related change. Revenue also plays a major role in maintaining balance in Maxio Platform as a Customer's or Contract's transactions, invoice line items, and revenue totals must all be the same.

Managing Transactions

The transaction is a specific type of financial record that represents a contract element in Maxio Platform.

You add and manage transactions to record subscriptions and non-recurring purchases and, in so doing, produce revenues and invoices as a byproduct. Typically, transactions are added to your Maxio Platform account by processing sales orders from a connected CRM. However, you are able to add them manually as well.

Transactions are essentially contract elements that can only be added to contracts within Maxio Platform. The transaction's amount represents the contracted value of that element. Each transaction is assigned an item that corresponds to a product, service, or SKU that your organization licenses or sells.

Transactions contain revenue schedules, which track the recognition of deferred revenue. The start and end dates of the revenue schedule do not have to correspond to the transaction's dates (but they typically do). In addition to this, the dates of the invoices that contain the transaction's invoice line items do not have to match the dates of the transaction or revenue schedule.

If the transaction's amount, revenue, and invoice line items are not all equal, then the transaction is out-of-balance. This condition highlights records that need to be adjusted.

You can learn more about Transactions by checking out this help article: Transactions Overview.

Customers and Contracts

Customers are the entities that subscribe to and purchase your products. Customers can also be your distributors and resellers. Each customer can have contracts that contain transactions as well as revenues, invoices, and payments.

Contracts serve as containers for key records like transactions and invoices. A customer can have one or more contracts and each contract can hold one or more transactions and invoices. The contract is the object around which deferred revenue and unbilled AR calculations are performed in all finance reports. 

A contract belongs to only one customer, and a contract exists in only one register.  If you don't use contracts in your business, Maxio Platform will automatically create them for you during the transaction creation process.

You can learn more about Customer and Contracts by checking out these help articles:

• Customers Overview (Add, Edit, & Remove)
• Contracts Overview

Revenue Recognition

Each Transaction in Maxio Platform has an associated revenue schedule. The revenue schedule is created using the Transaction's start date, end date, and the selected recognition method.

You can learn more about Maxio Platform's revenue recognition methods by checking out this help article: Revenue Recognition Methods

Balance

Maxio Platform checks the balance of invoices, revenues, and transaction amounts for customers, contracts, and transactions to help ensure your financial reporting is accurate. An out-of-balance contract indicates a potential invoicing or revenue reporting problem. Maxio Platform uses the following logic to define balanced vs out-of-balance:

Balanced: Σ Transaction Amount(s) = Σ Invoice Line Items = Σ Transaction Revenues 

Out-of-Balance: Σ Transaction Amount(s) ≠ Σ Invoice Line Items ≠ Σ Revenues

"Σ" in this definintion means the total sum of each item.

Example:

$12,000 Transaction Amount ≠ $10,000 Invoice Line Items ≠ $12,000 Revenues

"Σ Invoice Line Items" is the total of the invoice line items, not the total of the invoices. Invoices can contain taxes that do not factor into revenue reporting, and/or line items that do not sync with Maxio Platform. It is important to note that an out-of-balance condition occurs unless all three are equal.

Out-of-balance transactions can and frequently do cause the contract and associated customer to be out-of-balance. It is best practice and highly recommended that you keep all transactions in balance. However, it is possible to have out-of-balance transactions that result in balanced contracts and customers.

You can learn more about maintaining balance in your account by checking out this help article: Out-of-Balance Conditions.

Contract Changes

The Contract Change functionality provides a best-in-class experience any time you need to change the amount or dates of your active transactions. When making a contract change, you have the ability to preview your changes before submitting them. You can make the following contract changes in Maxio Platform:

• Change the Amounts: You should use the Change Amounts feature of Advanced Contract Changes when you need to change the amounts of the Transactions.
• Change the Start or End Date(s): You should use the Change Dates feature of Advanced Contract Changes when you just need to change the date(s) of the Transaction(s).
• Exchange an Item: You should use the Change Dates feature of Advanced Contract Changes when you just need to change the item(s) of the Transaction(s).
• Early Termination or Reversal: You should use the Early Termination or Reversal features of Advanced Contract Changes when the amount of the revised transaction will be less than the original, and the transactions will not continue past the current or revised end date.
• Mid-term contract change: Our mid-term contract change leverages our multi-edit functionality.  This gives you the greatest flexibility in processing your contract changes and should be used whenever you have any combination of simple edits.

You may need to leverage Advanced Contract Changes when processing:

• Renegotiated contract amounts (ex: $1,200 to $2,400 per month rate)
• Offering a contract concession or extension (ex: 3 free months)
• Swapping one item for another (ex: subscription A for B)
• Early terminations (ex: cancelling the last 6 months)
• Contract cancellations (ex: cancelling the entire contract)

You can learn more about Maxio Platform's Advanced Contract Changes functionality by checking out the following help article: Advanced Contract Changes Overview.

Close and Lock Dates

Closing Dates impact the ability to add, edit, and delete Revenue and Invoicing information in Maxio Platform. There are a number of independent closing date settings in Maxio Platform. Working together, they prevent changes to data in the close period, which is any time prior to any of the dates below.

• Maxio Platform Closing Date: The Maxio Platform Closing Date is used to prevent the addition, modification, or deletion of information on or before the Closing Date. All dates on or before the Closing Date are considered to be in the Close Period.
• General Ledger Closing Date: When you connect your Maxio Platform account to a general ledger (such as QuickBooks or Xero), those systems contain their own closing date settings. Maxio Platform stores this date and uses it to prevent changes made after it to invoice data in the general ledger.
• Transaction Lock Date: The Transaction Lock Date prohibits adding or editing of Transaction fields not locked by one of the Close Dates. This setting is used to maintain data integrity for analytics reporting.

You can learn more about close and lock dates by checking out the following help article: Closing Dates and Transaction Lock Dates.