A real time revenue recognition tool

Abstract

Many Organizations receive money from customers for services or products for which the benefit is yet to be fulfilled. This arrangement creates a liability on the part of the seller equal to the revenue earned until delivery of the good or service. In case the seller ceases operations then the unconsumed service or product is refundable to the consumer, which is referred to as unearned revenue according to Generally Acceptable Accounting Principles (GAAP). Examples of such organisations or companies include Telecommunication companies selling prepaid services like airtime e.g., MTN, Digital Television subscriptions and Prepaid Electricity to mention but a few. Currently the challenge to most of the prepaid vendors is to accurately determine the liability of what is due to the customer in real-time or good time. Part of this challenge is due to architectural design and setup. It was necessary to carry out a study on the existing systems architecture of a prepaid organization to come up with an improved tool that could be used to quickly determine, accurately compute and manage unearned revenue. A study of the existing systems was carried out through a review of the various business processes related to the distribution, activation and usage of services and products, as well as interviews with various stakeholders within the prepaid environment. This led to a better understanding of the existing systems and the required system improvements. It is from these requirements that the system specifications were outlined, and the proposed system design developed. A prototype was then developed using PHP (5.5.38) scripting language and MySQL (5.6) database. Based on the prototype system and with the growth of the prepaid environment there is a need to have integration within the different systems in the environment to enable accurate and timely unearned revenue reporting and management. This system can be moderated for use in any related organization that needs to track, report and maintain its unearned revenue of prepaid products or prepaid services in general.