Advance Payment Rates in Revenue Recognition

To calculate the actual revenue at the time of settling advances with an invoice, the currency rates of the exact day when the advance payment is paid must be used. This is required to support the IFRS requirements (IFRIC [IFRS Interpretations Committee] 22).

IFRIC 22 - Foreign Currency Transactions and Advance Consideration: IFRIC 22 provides the standard for the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency.

IFRIC 22 is effective for annual reporting periods beginning on or after 1st January, 2018 and adopted by the EU on 3rd April, 2018.

Setup and implementation in Infor ERP LN

These are the steps to set up and implement Advance Payment Currency Rates in revenue recognition:

  1. Specify the parameters
    1. In the Implemented Software Components (tccom0100s000) session, ensure that the Point in Time Revenue Recognition check box is selected.
    2. In the Invoicing Parameters (cisli0100m000) session, select the Use Advance Payment Rates for Revenue.
      Note: This field is enabled only if the Separate Account for Paid Advance Installments check box is selected in the Finance Company Parameters (tfgld0503m000) session.
  2. When you create the advance invoice:

    In the Invoices (cisli3105m000) session, ensure that these (initially hidden):

    • the Store Advance Payments check box is selected where Infor ERP LN stores the advance payments when the payments are processed for the revenue invoice document.
    • the Use Advance Payment Rates for Revenue check box is selected which Infor ERP LN uses to calculate the payment rates as defined by IFRIC 22 for revenue recognition .
  3. Verify advance invoice line payments – When the advance invoice is paid:
    In the Advance Invoice Line Payments (cisli3118m000) session, the advance invoice lines are maintained. The payments are stored by invoice line to ensure that the settlement is adjusted against the payment rates.
  4. Verify advance invoice lines payments – When advance invoice is settled:
    In the Installment Invoice Settlement (cisli3620m100), review the Advance Invoice Line Payments details.
  5. In the Settled Advance Payment (cisli3122m000) session, review the data in line with the settlements and payments. This session enables you to view the details of the settlement amounts for the advance invoice and related payments. This is created when advance invoice is settled with the settlement invoice.
  6. When the goods invoiced is posted:
    • the advance installment paid transaction is reversed with the original payment rates. Revenue integration transactions are created with invoice rates. Additionally, revenue correction lines are created in the Revenue Lines (cirrc1120m000) session.
    • if the Point in Time Revenue Recognition is selected in the Implemented Software Components (tccom0100s000) session:
      • the settled payments are stored in Revenue Invoice Line Settled Advance Payments (cirrc1132m000) session.
      • advance currency rate difference records, for the advance settlement amounts are created in the Revenue Lines (cirrc1120m000) session.
      Note: If the Separate Account for Paid Advance Installments check box is cleared or there is an advance payment request instead of an advance invoice, the payments of the advance are processed after goods are settled. In this scenario, the record is not created in the Settled Advance Payment (cisli3122m000) session are not created during composing the goods line, but immediately after the payment.