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Handling Shortfall Amounts

Accounting Support

JustOn can generate separate booking details for so-called shortfall amounts – the difference between some actually incurred costs and the defined minimum price.

Consider the following use case: You invoice usage costs with a fixed minimum base price. That is, you combine usage data billing with price tiers, where the first tier has defined a flat price. Now assume that the actually achieved quantity of an item is smaller than the quantity for the flat price tier. You invoice the flat price, but your accounting may need to separately track a) the revenue resulting from the actual consumption and b) the revenue resulting from the difference billed by implication. To support this scenario, you apply the recognition rule Shortfall.

Info

Shortfall amount handling is available as of JustOn 2.52.

The Shortfall recognition rule requires the following invoice line item fields in particular:

Field Description
Base Quantity The actually achieved quantity, determined via usage data billing.
Quota Quantity The quantity specified for the flat price tier.
GL Account The G/L account used for the revenue resulting from the actual consumption. The value is taken from the G/L Account field of the Assignment Rules - G/L Account custom setting.
GL Account 2 The second G/L account, used for the revenue resulting from the shortfall amount. The value is taken from the G/L Account 2 field of the Assignment Rules - G/L Account custom setting.

JustOn applies the Shortfall recognition rule if the following conditions are met:

(1) The fields Base Quantity and Quota Quantity of the invoice line item are set, which implies

  • a price tier with the price type Flat
  • usage data billing properly set up to determine the actual quantity

(2) The value of Quota Quantity is higher than the value of Base Quantity.

(3) The field Recognition Rule of the invoice line item is set to Shortfall.

If the conditions are not met, JustOn uses the recognition rule Default.

Now if enabled and set up accordingly, JustOn creates two booking details when finalizing the invoice:

  • one for the revenue that results from the tracked product consumption
  • a second one for the revenue that results from the shortfall amount, that is, the difference between the actually incurred costs and the defined minimum price

    Make sure you have two G/L accounts set in GL Account and GL Account 2.

The invoice line item total (the defined minimum flat price) is split proportionally according to the determined quantity, as illustrated in the following example:

Price tier:

Quantity Price Price Type
500 1000,00 Flat

With an actual consumption of 400, the invoice line item has the following quantity information:

Field Value
Base Quantity 400
Quota Quantity 500

Applying the proportional distribution, this produces the following booking details:

# Booking Account Calculation Amount
1 G/L Account (400 / 500) * 1000,00 800,00
2 G/L Account 2 (100 / 500) * 1000,00 200,00