If your revenue recognition forecasts are little more than an educated guess (or even a stab in the dark), then this article is for you.

I’ll explain precisely how to use product schedules to forecast revenue recognition accurately.

Whatsmore, I’ll show you how to automate this process in Salesforce.

The best bit?

You’ll get reliable forecasts that will stand up to scrutiny without a pile of extra work by finance or salespeople.

Let’s dive in.

Who Needs A Revenue Recognition Forecast?

Any business where opportunity revenue accrues over periods needs to forecast revenue over time.

In other words, either you don’t invoice the customer in one go for the entire opportunity amount when winning the deal. Or you do invoice the total amount but must claim the revenue over many months or even years.

Income accrues over time, for example, with:

• Manufacturing companies using framework agreements.
• SaaS businesses that have monthly recurring subscriptions.
• Professional services where the project takes many months.

Sometimes an opportunity has more than one type of revenue that spreads over time. Often, the revenue streams have different start and end dates.

I’ll explain precisely how to handle all these cases.

The Revenue Recognition Problem

Here’s what often happens.

The sales team updates their opportunities in Salesforce. The result is a bottom-up forecast of booked revenue for each month or quarter, based on deals expected to close successfully.

The VP of Finance takes this data and exports it into a spreadsheet.

Or, because he doesn’t trust the sales teams’ forecasts, he maintains his own sales projection data. Either way, the finance team manipulate the spreadsheet to create a top-down revenue recognition projection.

Unfortunately, often neither forecast turns out to be very reliable.

However, you can address both problems.

First, you can improve pipeline management and gain complete visibility of the sales pipeline to avoid poor quality sales forecasts. Here’s where to start with this:

12 Must-Have Salesforce Dashboard Charts | With Video And Examples

This blog post gives excellent advice on using Salesforce dashboards to deliver complete sales pipeline and sales performance visibility. It even includes a free dashboard that you can download from the AppExchange and install into your Salesforce environment.

Second, you can use product revenue schedules to achieve an accurate revenue recognition forecast.

Here are two examples.

• Based in Bolingbrook, Illinois, Amsive provides data-centric marketing to many US leading financial institutions, medical care providers, retailers, and real estate companies. Projects often last many months. The company also has framework agreements in place with many clients that span multiple years. Consequently, Amsive uses product schedules to forecast revenue recognition accurately.
• Headquartered in Toronto, Canada, you know LG as one of the world’s leading consumer electronics equipment manufacturers. Forecasting future revenue recognition and product volumes is critical to this company. That’s why the business uses product schedules in Salesforce to deliver the clarity that a wide range of stakeholders demand.

Product Schedules Explained

A Product Schedule forecasts how the revenue from a product linked to an opportunity will spread over time.

Remember, each schedule links to a product on the opportunity rather than directly to the opportunity itself.

Let’s take an example.

The total sales value of this opportunity is $55,000. The Opportunity Stage is Proposal/Price Quote, so we’re looking at a pipeline deal. The Close Date shows that we expect the sales deal to complete in mid-May.

The Amount field value of $55,000 is the total value of three Products on the opportunity.

We can see that we are selling a combination of capital items (the generators), professional services (the engineer) and a software license.

Your products will be different, of course. Nevertheless, the essential point is that we need to recognize the product revenue over time.

However, the revenue recognition for each product does not necessarily start as soon as we win the opportunity.

In our example, the services work by the engineer begins in May and lasts for two months.

That means we are recognizing the revenue in May in June.

In contrast, let’s assume that we can start revenue recognition for the generators in June. And that we must spread the revenue over six months.

Likewise, we can schedule the software license. Let’s assume it also starts in June, but this time we must spread the income over twelve months.

Of course, how you invoice may be different from the product schedules. That’s because the schedules describe the revenue recognition profile rather than the physical invoice dates.

Here’s how the schedules look in a report:

The report breaks down the revenue by Product Family and month.

You can see the information from a different perspective in this chart.

Next up:

How to create product schedules that track revenue recognition in Salesforce.

Two Product Schedules Options In Salesforce

There are two options for tracking revenue recognition in Salesforce.

First, use the Salesforce standard product schedule function. Second, use the GSP Product Revenue Schedule app.

This blog post explains more about both options:

How To Track Revenue Over Time In Salesforce

We built the app because the standard schedule feature is challenging and cumbersome for salespeople to use.

I made this short video to demonstrate the essential differences in the two ways to create product schedules in Salesforce. If you prefer, skip the video and jump to the screenshots.

Here are some of the main differences between the two options.

Creating Product Schedules

Standard schedules. The salesperson adds the opportunity products. Then revisits each product in turn to create the schedules.

GSP app. The salesperson creates the schedules at the same time as adding the products to the opportunity.

Close Date Changes

Standard schedules. The salesperson visits each product to adjust the schedule when the close date on the opportunity changes.

GSP app. Schedules adjust automatically when the close date changes.

Fine-tune Product Schedules

Standard schedules. No method to adjust schedules for each opportunity.

GSP app. Flexibility to fine-tune product schedules based on each opportunity. S-curve and other revenue profiles are also available.

Track Actuals Versus Product Schedules

Standard schedules. No method to compare the forecast revenue with actual income after winning the opportunity.

GSP app. In-built tracking of actual versus forecast revenue.

High-impact Reports and Dashboards

Standard schedules. Reports are pretty challenging to set up and use.

GSP app. Pre-built dashboard and flexible reports for complete visibility of product schedules on won and pipeline opportunities.

The other essential difference between the standard schedules feature and the GSP app is that we can customize the app to meet different revenue recognition business needs.

For example, we have many customers that schedule product quantity rather than revenue. They also have custom fields on the product schedule to further improve reporting and visibility.

What Next?

Here are three things you can do next.

1. Take a free trial of the GSP app. There’s a free 14-day trial available for the app. You can do this in either your sandbox or production Salesforce environment. Log in to the AppExchange with your usual Salesforce credentials, hit the Get It Now button and follow the instructions (no credit card needed).
2. Get in touch for a personal demo. Get in touch to walk through the app together. We can discuss your revenue recognition and product schedule needs and agree upon the best approach. Use the Contact Us page and enter your details.
3. Read more about revenue schedules. We have several other in-depth articles about scheduling revenue over time. For example, try How To Schedule Revenue Over Time In Salesforce.

Many people tell me how it’s difficult to forecast revenue over time in Salesforce.

That’s partly why they often make one of the three scheduling mistakes that I outline below.

Nevertheless, it’s often vital to schedule revenue over time.

That’s because sometimes, no money changes hands when the deal is won.

Instead, income accrues over time.

Fortunately:

If you need to know how to schedule opportunity income and forecast revenue over time confidently, then you are in the right place.

Why You Need To Schedule Revenue

Prefer to watch a video? Or scroll down to continue reading.

Revenue schedules spread the total opportunity amount over time. The sequence of schedules defines the income you will receive over many months from a won or pipeline opportunity.

For example, let’s say you win a $12,000 opportunity in April.

However, you don’t receive the $12,000 in April. Instead, the revenue spreads over the following twelve months.

It may even be that there’s a lag between the closing month and the start of the income.

Many types of companies need to track income over time.

For example:

• Professional services that deliver projects over time.
• Capital equipment items that the customer draws down or pays for over a period.
• Support or maintenance contracts that span one, two, or three years.
• Software-as-a-Service (Saas) licenses on fixed-term or open ended-contacts.
• Framework agreements, where you know the customer will buy every month, but with no fixed or guaranteed amount.

Sometimes, there’s more than one type of these products or services on a single opportunity.

The upshot:

Forecasting income over time is as essential as measuring booked revenue per month. Maybe it’s even more critical than booked revenue in your business.

That means you need an easy yet powerful way to create and maintain accurate product revenue schedules. Otherwise, you lack robust forecasts and clear visibility of future revenue.

How To Schedule Revenue Over Time

Here are the four ways you can schedule revenue over time in Salesforce:

1. Standard Salesforce Product Schedules.
2. Create multiple opportunity fields.
3. Create different opportunities for each month.
4. Use the GSP Revenue Schedules app.

I’ll carefully explain each of these four options.

Bottom line:

The GSP app is the quickest, easiest, and most effective way for salespeople to schedule revenue. Use this link to short-cut straight to the details: GSP Revenue Schedules App

Option 1: Standard Salesforce Product Schedules

Option 1 is to use the standard product schedules feature.

That works for some businesses. However, there are some significant limitations. The most important of these is that the user interface is cumbersome and inefficient for salespeople.

Here’s how the standard product schedule function works in Salesforce.

The salesperson adds one or more Products to an opportunity in the usual way.

After that, the salesperson creates a Schedule for each product line item. They do this by clicking on each product line item, then on the Establish button.

The Establish button provides the popup to enter details about the schedule for the opportunity product.

Consequently, we have a revenue schedule that tracks product income over time.

Unfortunately, the salesperson must repeat this process for every other product on the opportunity.

Advantages of standard product schedules

• Standard functionality. There’s no need to purchase a separate app.
• Reports and dashboards. You can track scheduled using reports and dashboards (although this is limited).

Disadvantages of standard product schedules

• The user interface is cumbersome (putting it mildly). For example, the salesperson must create the revenue schedule for each product separately.
• Salespeople cannot create revenue schedules while adding the product; they have to add them afterward.
• If the opportunity close date changes, the schedules do not automatically shift. The result is that the revenue schedules quickly get out of kilter with the opportunity.
• There’s zero ability to track committed and pipeline revenue schedules versus target.
• Reports and dashboard formats the standard schedules are inflexible and hard to use.

The result is that many companies that need to schedule revenue over time in Salesforce don’t. Unfortunately, this means they lack visibility of future income.

Consequently, they often attempt to resolve this in one of three other ways.

Option 2: Create Multiple Opportunity Fields

The second option means you create multiple fields on the opportunity. These fields store the revenue for each quarter or month.

My opinion:

This approach is always a mistake.

The reason is that it’s almost impossible to produce meaningful reports and dashboard charts. That’s because you are adding up data from multiple fields if you want to get a total for the year.

Furthermore, it vastly reduces usability because of the time it takes to enter the data. So my advice is not to do it.

Option 3: Create different opportunities for each month

The third option is to create a distinct opportunity for each month.

For example, let’s say you have a framework agreement with a customer. Each month, they place a new order. With this option, you must create a fresh opportunity each month to record the revenue.

As you can see, there’s much work to create the opportunities. And, of course, it distorts reports that track the win rate and average deal size.

On the other hand, it does deliver better visibility of historical and future revenue than option 2, providing you keep the opportunities up to date.

Option 4: GSP Product Revenue Schedules app

Tracking revenue over time is essential, yet none of the alternatives cut the mustard.

It’s why we built the Revenue Schedules app. It’s listed here on the AppExchange.

Before we get into the detail, the essential things to know about the app are:

• It’s quick and easy for reps to use.
• Revenue schedules from won and pipeline opportunities mean accurate forecasts.
• You can easily compare scheduled revenue over time with targets.
• All schedules update automatically when the opportunity changes. For example, if the Close Date moves, the schedules also move without extra work for the salesperson.
• You can analyze income over time by product, territory, salesperson, or any other parameter.

I recorded a video to show you exactly how the app works. Or scroll down for screenshots and a step-by-step guide to the app.

New video here.

How To Create Revenue Schedules

Using the app, the salesperson starts by adding products to the opportunity the usual way.

You can see the standard Quantity and Sales Price fields. However, this time there are also have two new fields: Revenue Start Date and # Revenue Months.

These fields define how the product revenue will spread over time.

Clicking Save adds the products to the opportunity and creates the revenue schedules.

You can also use the Mass Edit Schedules button to see all the schedules.

How To Adjust Revenue Schedules

Let’s say the salesperson needs to modify the number of schedules or the revenue start date.

That’s straightforward to do.

Hit the Edit Line Items button.

The page lets the salesperson quickly and easily edit all products’ revenue schedules.

Hit Save, and the revenue schedules update immediately.

Moving Schedules When The Close Date Changes

Changes to the Close Date are probably the most common update on opportunities.

In other words, the salesperson believes the deal is closing this month. Unfortunately, decisions get delayed. We need to move the Close Date to another month.

With standard Salesforce product schedules, this is mightily cumbersome. You have to go to each opportunity product and re-establish the schedules.

Of course, no one remembers to do that. Consequently, the schedules are quickly out of kilter with the opportunity lifecycle.

That’s different with our app.

All the revenue schedules automatically change by the same number of days as the Close Date shift. In other words, zero extra effort for salespeople.

As a result, your revenue forecasts are always up to date.

Manually Adjust Product Revenue Schedules

Sometimes the salesperson needs to tweak a straight-line revenue profile.

For example, there’s a ramp-up of revenue in the first couple of months.

Here’s how you do that. Hit the Mass Edit Schedules button.

Make your changes to the product revenue schedules.

You can see the adjusted total shown in red. This number indicates that the amount you have scheduled is different from the original value of the opportunity product line item.

You now have two choices.

The first option is to hit Save straightaway. The app adjusts the line item Total Price to match the new revenue schedule value ($11,250 in this example). That means the value of the opportunity corresponds with the total scheduled revenue. Everything is in sync.

The second option is to hit the Auto Adjust button. This time, we allocate the amount by which you reduced the initial months to the remaining schedules.

This adjustment keeps the original opportunity Amount the same and means the value aligns precisely with the total scheduled revenue.

Again, quick, easy, and straightforward for the salesperson.

Ramped Revenue Schedule Profiles

As you’ve just seen, it’s straightforward to make a change to the straight-line revenue profile.

But what if you need an entirely different profile?

The app comes with a pre-built S-Curve schedule profile. This profile is great for companies where the income at the start and end of the cycle is low and higher in the middle.

For example, many construction companies have this type of revenue profile on building projects.

We can also build custom templates for other types of schedule profiles. These include ramped revenue schedules and serpentine curves, for example, when income is seasonal.

Get in touch to find out more.

Compare Expected Revenue With Actual Income

Here’s what happens when you win the opportunity.

The Revenue Amount passes into the Updated Projection column.

Now you have the option to update this second column with the actual revenue for each month. You can also enter the income you expect to receive in the coming months.

Consequently, we can compare two things: the revenue we expected to generate when the opportunity was won, with the latest forecast based on actual figures and future estimates.

This comparison is critical in many businesses.

For example, let’s say you win an opportunity to sell 200 gas pumps. The customer plans on taking over 12 months, in line with their gas station re-fit program.

Your product revenue schedule defines how you expect to realize the revenue over time. Perhaps you’ve even made some manual adjustments to get it spot-on.

However, suppose the site re-fit program doesn’t proceed as fast as planned. Each month, the account manager updates the Projected Revenue based on the latest information.

It means you have a solid grip on the revenue you expected when the salesperson won the deal and the latest projection based on real-life data.

Revenue Schedule Summary Information

We’ll talk about reports and dashboard charts in a moment. However, first, let’s look at the information that rolls up to the opportunity.

The total value of the revenue schedules is the first field to notice. We can see that it’s the same as the opportunity Amount. In other words, we are scheduling revenue on all the products.

There are a total of 24 revenue schedules.

And the total Forecast Revenue is $11,550.

This figure means we have entered the Updated Projected amounts and expect to receive more revenue than anticipated when winning the deal.

Next, let’s look at the reports and dashboards.

Product Revenue Schedule Reports and Dashboards

Salespeople and many other people in the company need visibility of opportunity revenue over time. This visibility includes tracking revenue recognition using revenue schedules.

The apps’ dashboard gives you that visibility. Here are some examples of the reports and charts included in the dashboard.

Won Scheduled Revenue This FY

The metric on the left shows that $1.4M of scheduled revenue will land this year. Of course, the income may be from opportunities won this year, the previous year (or earlier). In other words, the revenue is landing in this financial year irrespective of when the salesperson won the opportunity.

The chart to the right of the metrics shows the month-on-month revenue for the year.

We can also see $3.5M of revenue due to land this year from open opportunities. These deals are still in the pipeline, but there is revenue due to land this year.

Here’s another perspective. This time we are looking at the Expected Revenue. This figure is the sum of won scheduled revenue plus the weighted value of the pipeline schedules. (The weighted pipeline over time is the scheduled amount multiplied by the opportunity probability).

Remember the $1.4M of won scheduled revenue? The following chart shows that $695K of this is “earned.” In other words, the date the income is due to land is today or earlier.

We can also see the breakdown of won and pipeline scheduled revenue by product family.

And drill down to the underlying report on any chart to see more details.

Of course, you can customize any of these reports and dashboard charts to suit your specific needs.

Want To Know More About Revenue Schedules?

Here are several more steps you can take.

1. Take a free trial of the GSP app. Visit the AppExchange to watch the video, see more screenshots, and take a 14-day free trial. Hit the Get It Now button on the Listing to set up your trial (no credit card needed).
2. Get in touch for a demo. Let us walk you through the app. We can see whether it does what you need and answer your questions. We can also talk about whether you need to customize the app to meet your specific needs. Use the Contact Us page and enter your details.
3. Read more about revenue schedules. We have several other in-depth articles about scheduling revenue over time. For example, try How to Use Product Schedules to Improve Your Revenue Recognition.

You can also, of course, find out about our other apps, including the GSP Target Tracker that measures pipeline coverage and sales performance versus quota.