In this episode of ShellBlack Whiteboard we look at the two types of Product Schedules: Product Schedules and Revenue Schedules. These schedules are sets of dates that differ from the Opportunity Close Date. In the case of Product Schedules, it’s the date you shipped, fulfilled or delivered a specific product, or in the case of Revenue Schedules, it’s the date(s) you recognized the revenue (billed, invoiced or when paid). Shell uses multiple customer scenarios to explain each type.
Shell then walks though how you can run a Product Schedule report across multiple Opportunities and Products to see your totals by period (e.g. schedule month). Lastly, he explains how to create a Product Schedule from an Opportunity Product using the wizard, and that you can always adjust your schedule as well as check your totals.
View this video on YouTube: http://youtu.be/wqxZRm_8LG0
Other blog posts on this topic:
Transcript of video:
Hello everyone. Welcome to another episode of ShellBlack Whiteboard – where we help you get the most out of the Salesforce platform. I’m Shell Black, president and founder of ShellBlack.com and Salesforce MVP. Today’s topic is Product Scheduling.
It’s kind of a weird topic. It’s something I really can explain better if I give you some real world examples rather than try to explain it. One thing you need to think about is the Close Date of the Opportunity is when you won the deal, when you rang the bell, when the customer said "yeah, I’m going to buy this." The Schedule Date is when you deliver those Products or when you recognize the revenue from those Products.
Let’s go through Product Scheduling. There are two flavors, Product Schedules and Revenue Schedules. Product Schedules, the best way I can do this is, again, an example.
Let’s say that you’re selling magazines. Someone buys for $55, the Amount of the Opportunity, 36 issues of this magazine. You sold it on one date, the Close Date, but you’re delivering or you’re doing the shipment of the fulfillment of that Product over time. You might have the first month as June 2014. That runs three years out, and you stop delivering on June 2017. This is when your units are being fulfilled of those Products – again, delivery, shipment, or the fulfillment of what you sold.
You sold it on your Close Date. That’s when you won it. Your Product Schedule tells you when you’re delivering that Product.
Let’s take a look at a revenue schedule. Still has to do with Products. I’m going to give you another example.
You’re selling a car lease. Someone’s buying a $600 a month lease for 36 months. If I do my math right that’s $21,600. Maybe that’s the Amount field on the Opportunity. You sold a lease with a contract value of $21,600 the Amount. You sold it on a certain day. That’s your Close Date.
But, you don’t bill or invoice or recognize the revenue except month by month. So, you’re not recognizing all $21,600 worth of revenue. It depends on when the lease starts and when the lease sends, and every month you’re recognizing – or getting paid, or billing, or invoicing, however you want to look at it – $600 over a schedule or a period of time. When you ship or deliver units, dollars get billed.
Let me give you a couple of other examples of some real life Product Schedules that I’ve had with my clients. The first one I want to give you is there was a national retailer that we were working with. They had hundreds of stores across the US, and they were constantly buying leases for new stores, negotiating leases. So, leases would go through three year lease, five year lease. They’d have increases over time.
What the CFO wanted to know was his lease obligation. He wanted to know a report we called the "rent roll." For all those different months he’d have different amounts due for all these stores. But, he wanted to know for any physical period, Q4, whatever it is, how much are we obligated, how much are we going to need to hold back as a company to make sure that we’re meeting our lease obligations. I’m going to give you a schedule example here in a little bit.
The other one is a magazine publisher. This was more of a Product Schedule, but they were selling advertising for a magazine – inside front cover, back cover, so many quarter page ads, half-page ads. They were allowing their salespeople to mark if they sold a quarter page ad which month they fulfilled it, because there’s a finite amount of inventory that they could sell in a magazine. You only have so many back covers, you only have so many inside covers, two page spreads, whatever.
So, by month based on when people sold that inventory they could run a schedule kind of like we’ve got over here. You could run a schedule and see what was the available inventory to sell.
This is a good visual representation of a Product Schedule, and almost in a report format you can run a report to see a Product Schedule. What I’ve got is two Products. I have a $100 Product, which is Product one. I have a $300 Product, which is Product two. Product one we sell monthly for $100. Product two we sell quarterly for $300.
If I ran a report of all the opportunities that I had with all these two Products, I can start to see how… Based on when we sold the Product and where the revenue was scheduled, I can start looking at totals at the bottom across all my Opportunities to see what my revenue would be.
Product one, we started the schedule on January. We sold it for the rest of the year, $100. Product two, maybe some of the same Opportunity, we sell it for $300 and we sell it quarterly. So, it fell in March and June.
Another Product one got sold. This time we started the Product Schedule in February, ran it out for the rest of the year. Product two, this time we sold it in April, and the next quarter for that person was in July.
Product one started April, the rest of the year. Product two is the quarterly Product. It started in June, did not have another one.
But, I can start running a report and I can start seeing my totals of all my Products as they were scheduled out over time. We’ve got eight months here. This may have been an $800 sale. But, I’m recognizing the revenue or scheduling that revenue out over time, then, I can aggregate that out.
Kind of like that rent roll obligation I was doing. If these were leases for different stores, you can aggregate that. The way this works is you have an Opportunity. You’ve got a Product on that Opportunity. You sold it for a certain amount.
Once you’ve won the deal you click a button to create a Product Schedule. You’ve got three fields that you’ll end up getting that you’ll want to pick to establish this schedule.
The first thing is the schedule type. It basically says you’ve got a dollar amount for that Product. Say it’s $1200. Do you want to divide that amount into equal revenue installments? Or, maybe it’s a quantity. Maybe you had 12 quantity. Or, do you want me to divide the quantity out over equal installments? Again, is it a revenue dollar schedule, or is it a product number schedule?
Then, once you say what you want to divide, either the units, the quantity, or the amount, what’s the installment period? What’s the frequency? Is it going to be weekly, monthly, quarterly, annually, whatever it’s going to be? Then, how many installments do we want to do – four installments if it’s quarterly, 12 installments if it’s monthly – how do you want me to break up that number?
What this does is a little wizard in Salesforce will schedule out based on these filters that you pick up front and create the schedule. You can always go back and adjust. Maybe you want to pull a little bit of money in the front. Maybe you want to back off the amount in the back.
There’s actually a recalculate button so you can check your totals. If you’re tweaking the schedule but you know you need to come up with $1200 for the total sales price, you can just double check your math real quick and have it re-sum all the amounts to make sure that you’re still on schedule.
Okay. Hopefully, that helped. I think Product Schedules is best illustrated using examples, so I hope some of those examples helped.
That’s it for this segment. If you have any feedback on how we’re doing you can hit us a couple of ways. You can hit us on Twitter, Shell_Black. Or, you can send us an email by sending an email to email@example.com.
I appreciate you tuning in. We hope to see you soon on a future installment.