Aligning Your Org to Accounting and ERP Systems

Salesforce Billing lets you pass transactional data such as invoice lines, payments, and adjustments to an ERP system for reporting and revenue recognition. You can follow several guidelines for treating Salesforce Billing data to ensure a clean handoff to your accouting and ERP systems. (Salesforce Billing Managed Package)

Identifying Legal Entities

Legal entities are Salesforce Billing objects that represent how your organization is structured. Each legal entity record relates to a billing, tax, revenue recognition, and general ledger treatment for an order. For example, if your business is split into multiple legal entities that sell different products or services to different regional customers, you can provide each entity with a different treatment that dtermines how data is mapped for handoff to an ERP. Based on these treatments, a legal entity can specify actions such how to report on recognized revenue or how to credit and debit different general ledger accounts within the ERP system.

Every order product requires a lookup to a legal entity. You can control several treatment setups by creating a legal entity for each setup, then assigning your legal entities to order products as needed. For example, when you apply tax to an order product, Salesforce Billing checks the order product’s legal entity, checks for a tax treatment record with a lookup to that legal entity, then applies the tax treatment accordingly.

By default, order products don’t have a value for their legal entity. Use a process builder, workflow rule, or manual assignment to provide legal entities to your order products.

Translating the Chart of Accounts

An organization's chart of accounts defines how to categorize billing transactions within the company for reporting purposes. We refer to these charts as GL Accounts in Salesforce Billing. Common account types include assets, liability, revenue/income, expense, and contra-revenue.

Salesforce Billing allows businesses to dynamically choose the correct account for a product based on legal entities and selling scenarios. You can also recognize a product or service's revenue within one bucket or split revenue into multiple buckets and accounts. This flexibility lets you minimize the number of SKUs you need while providing accurate information for accounting in an ERP ledger.

Salesforce Billing accomodates these scenarios through billing, revenue recognition, and tax rules, and their related treatments. You can set up an organiztion's chart of accounts as a series of records within Salesforce Billing, then associate them with rules and treatments through GL rules and GL treatments.

Determining Revenue Distribution Methods

Subscription economies have caused complex rules around recognizing recurring revenue. Compliance requirements for ASC-606 and IFRS-15 revenue reporting regulations have added further challenges for enterprise B2B scenarios.

Salesforce Billing lets you recognize revenue for one-time, subscription, and usage-based products. Organizations can determine when in the billing process that your organization will recognize revenue from a good or service based on performance obligations. We've provided revenue distribution methods, which let you customize how you recognize revenue across different products. You can even split the revenue allocation of a product into multiple revenue transactions based on how you're charging the customer and recognizing revenue behind the scenes. You can then summarize Salesforce Billing's transactional revenue data and send it to an ERP system to complete revenue recognition, financial reporting, and month-end processes. Since Salesforce CPQ and Billing manage the product catalog, the ERP can then leverage active revenue processes.

Integration Options

When you're integrating Salesforce Billing and an ERP system, consider the volume of data you're working with, timing and frequency requirements, and the ERP system's input formats and methods. At a high level, you have three options for sending data to the ERP.

• If your data volume and complexity is low, you can use a swivel chair process for manual data entry using Salesforce Billing transaction reports.
• Use a middleware tool to get Salesforce data via APIs, then transform it into a format that the ERP can load and consume. This approach is useful if you need an automated process to transform data due to its volume or complexity.
• Build a custom point-to-point integration to move transaction data in real-time or in batches. This approach is useful if your data requires a high degree of transformation.

• Store Transaction Records in Finance Books
  Store financial transaction records in a finance book. These records include invoice lines, payment allocations, credit note lines, and revenue schedules. Salesforce Billing organizes these records by date and legal entity into finance periods. (Salesforce Billing Managed Package)
• Chart of Accounts
  An organization's chart of accounts, known as GL Accounts in Salesforce Billing, defines how the company categorizes billing transactions for reporting purposes. You can set up a chart of accounts in Salesforce Billing and associate it with transactions by linking billing, tax, and revenue recognition treatments to GL rules and treatments. (Salesforce Billing Managed Package)
• Setting Up Taxation
  Salesforce Billing uses tax rates and default tax addresses alongside your chosen tax engine. (Salesforce Billing Managed Package)