Integration Between Order Management, Subscription Management, and Revenue Management

Modern enterprises often manage a mix of physical goods, services, and subscriptions. To ensure accurate financial reporting and compliance with ASC 606 and IFRS 15, seamless integration between Order Management (OM), Subscription Management, and Revenue Management is critical.

This end-to-end integration provides visibility across the order-to-revenue lifecycle and ensures that revenue recognition aligns with contractual obligations and performance milestones.

Extraction of Sales Orders (Order Management → Revenue Management)

• Sales orders created in Order Management are extracted and sent to Revenue Management as soon as they are submitted.
• For subscription and service-based items, Order Management also provides service duration and price periodicity details.
• Revenue Management uses this information to recognize revenue according to the satisfaction plan, ensuring compliance with accounting standards.

Revisions of Order Lines (Order Management → Revenue Management)

• Any changes to sales order lines before fulfillment are communicated to Revenue Management as revision lines.
• The revised transaction price is automatically reallocated across performance obligations with each revision.

Returns and Revisions of Standard Items (Order Management → Revenue Management)

• When standard products are returned or revised, the information is extracted from Order Management and sent to Revenue Management for further processing.

Fulfillment in Order Management

• Standard Items (OM → Revenue Management): When fulfillment occurs, Order Management passes fulfillment details to Revenue Management, which recognizes revenue to the extent of fulfillment.
• Service & Subscription Items (OM → Subscription Management): Fulfillment information is routed through Subscription Management, where subscriptions are created and managed.

Sending Service or Subscription Information to Revenue Management (OM → Subscription Management → Revenue Management)

• Subscription Management creates a subscription based on the data received from Order Management.
• Subscription details are then passed to Revenue Management as a revision line, even if Order Management has already submitted an earlier version.
• If no revenue-impacting attributes are revised, Revenue Management does not trigger reallocation.

Revisions of Subscriptions (Subscription Management → Revenue Management)

• If a subscription is modified in Subscription Management (e.g., upgrades, downgrades, or extensions), the revised details are sent to Revenue Management for revenue adjustment.

Termination or Amendment of Subscriptions (OM → Subscription Management → Revenue Management)

• If a subscription or service is terminated in Order Management, this information is communicated to Subscription Management.
• Subscription Management then updates Revenue Management with revised or new revenue lines, ensuring accurate accounting.

Invoicing (Subscription Management → Receivables)

• Subscription Management generates invoices for services or subscriptions.
• Invoices flow into Receivables as part of the integrated subscription process.

Import Billing into Revenue Management (Receivables → Revenue Management)

• Billing data from Receivables is imported into Revenue Management and matched with revenue lines that originated from Order Management.
• This ensures alignment between invoicing and revenue recognition.

Business Benefits of This Integration

1. ASC 606 / IFRS 15 Compliance

• Automatically identify and create revenue accounting contracts and performance obligations from sales orders.
• Allocate transaction prices based on the relative allocation method to each distinct obligation.
• Recognize revenue at a point in time or over time based on satisfaction events.

2. Lifecycle Event Management

• Process terminations, amendments, and revisions across services and subscriptions.
• Automatically revise accounting contracts and reallocate prices as needed.

3. Receivables Alignment

• Record billed amounts as receivables.
• Apply billing lines from Receivables to contracts in Revenue Management, offsetting contract asset balances.

Tips and Considerations

• Sales orders from Order Management (except internal sales orders) flow to Revenue Management automatically.
• Order Management provides service duration and periodicity only when integrated with Subscription Management.
• Subscription Management sends satisfaction plans and base pricing details to Revenue Management.
• In integrated flows, all charges are sent from Order Management to Revenue Management. In basic flows, only the primary charge is sent.
• User charges do not flow from Order Management. Instead, Subscription Management sends them directly to Revenue Management.

Final Thoughts

The integration between Order Management, Subscription Management, and Revenue Management provides organizations with a streamlined order-to-revenue lifecycle.

By automating the flow of contracts, fulfillment, subscription details, billing, and receivables, companies can:

• Stay compliant with global accounting standards.
• Ensure transparency in revenue reporting.
• Gain efficiency by eliminating manual reconciliations.
• Support growth in subscription-based and service-driven business models.

This integration isn’t just about compliance, it’s about building a revenue process that is accurate, scalable, and future-ready.