This guide describes the Annuities functionality, introduced in Kimble Release 1.22 and enhanced in Kimble Release 1.25. We have also attached a .pdf version for your convenience.
In Kimble Release 1.22, Kimble introduced an Annuities interface. Annuities are used to model recurring Revenues and/or recurring Costs on an Element where a continuous service is to be provided. Prior to 1.22, you could generate a fixed amount of revenue or cost on a per Period basis or on a per Unit per Period basis, with separate Period Revenue and Period Cost screens. The Kimble Annuities interface organizes all Cost and Revenue Periods on an Engagement into a single visual Gantt screen.
|Annuities are used to reflect a continuous delivery. If you are instead looking to reflect regular revenue and cost, without continuous delivery, use a Recurring Milestone Product Domain instead. For assistance configuring your Product Domains, please have your Kimble System Administrator log a ticket with the Kimble Support Desk or contact your Customer Success Manager.|
In Kimble Release 1.25, Kimble has introduced further enhancements around Annuities. Annuities can now be set to one of two Generation Modes:
- Forward, which generates Periods from the Start Date
- Backward, which generates Periods from the End Date
Prior to 1.25, all Annuities were Backward. Backward annuities take the end date as the anniversary, and calculate backwards for invoicing. This was a challenge when selling open-ended Annuities, in that they would require picking an arbitrary end date, and could not be easily amend once a client cancelled mid-period.
As of 1.25, all Annuities, including ongoing Annuities created in earlier version can be switched to Forward Annuities. Forward Annuities allow you to edit the End Date, Revenue, Cost and number of units (if unit based), for all periods that have not been Completed.
You will only be able to model Annuities on Elements that are based on Products with specific Revenue Generation models; this is determined by the Product Domain.
- Fixed Amount Per Period (Period Generated) – Annuity with fixed Revenue and Cost Rate
- Fixed Amount Per Unit Per Period (Period and Unit Generated) – Annuity with fixed Revenue and Cost Rate per Unit.
Invoicing Rules determine when an Annuity period is available for inclusion on an Invoice. Invoicing Rules are also set on the Product Domain.
- Invoicing Requires Completion – only Completed Annuities will be available for invoicing
- Invoicing Reference Date Rule – Invoice periods calculated from defined reference date
Invoicing Rules can be over-ridden at the Element level.
Where an Engagement has one or more Elements with a suitable Product Domain, you can create an Annuity.
- Navigate to the Annuities screen via the Financial Management sub-menu of the Engagement Menu.
- Click .
- In the New Annuity window, enter the details of the Annuity.
Depending on the Product Domain Configuration, some or all of the fields below will be available.
- Annuity Name – Enter a name for the Annuity
- Annuity Behaviour Rule – Select Forward or Backward
- Start Date – Enter a Start Date for the Annuity
- Number Of Periods – Defaults to 12 (monthly cost/revenue), but can be manually edited
- End Date – Enter an End Date for the Annuity
- Recurring Revenue – Enter the recurring revenue that will be brought in per period or per unit per period
- Cost Rate Rule – Select CostFactor or FixedCostRate
- CostFactor will allow you to enter the percentage of the Recurring Revenue that will make up the Forecast Cost.
- FixedCostRate will allow you to enter the Forecast Recurring Cost itself
- If the Annuity is configured to be Unit based, you will also select the Units Unit Type from a dropdown menu, and enter the number of corresponding Units in the Units
- When you have entered the relevant details click .
Details of existing Annuities on the Engagement can be seen on the Annuities screen. Monthly Forecast Revenue and Forecast Cost will appear on the Gantt on the right-hand side of the page.
Forecast Revenue and Forecast Cost per month are calculated on a pro-rata basis, depending on:
- how many days are in each month
- the Start Date (which may not be the first of the month).
To make changes to an existing Annuity:
- Navigate to the Annuities screen.
- Click next to the Annuity you wish to edit.
The Edit Annuity window appears.
- In the Edit Annuity window, you can amend:
- Annuity Name
- Annuity Behaviour Rule
- Start Date (if no Periods have been Completed)
- End Date
- Recurring Revenue (Note: this change will only take effect for Periods that have not yet been Completed)
- Cost Rate Rule (Note: this change will only take effect for Periods that have not yet been Completed)
- Cost Rate Factor (%) or Recurring Cost, depending on the Cost Rate Rule (Note: this change will only take effect for Periods that have not yet been Completed)
- Units Unit Type (if editing a Unit Based Annuity)
- Number of Units (if editing a Unit Based Annuity)
- Click .
You can also create additional Annuities to reflect expansion (e.g. additional users or additional products/services) within the duration of the Element. Starting the new Annuity on the monthly anniversary of the original Annuity will ensure that all Annuities within the Element will co-terminate. To create an additional Annuity, go through the same process as when adding an Annuity.
Negative Annuities can be created to handle a reduction in the number of units without the need to edit the existing Annuity This helps surface the reduction, as a separate Annuity is visible on the Annuities screen.
A negative Anuity behaves the same way as a regular Annuity, except it detracts from the total contract revenue.
To create a negative Annuity you can go through the same process as if you were adding any new Annuity, but enter a negative Recurring Revenue, and set the FixedCostRate to 0.
If using a Unit based Annuity, enter the number of Units you wish to take from the original Annuity.
The Negative Annuity will be visible on the Annuities page. and the Revenue reduction will be visible on the Proposal, Engagement and Element.
Completing an Annuity Period will (after any configured Approvals) actualize the Forecast Revenue and Cost.
You can complete Annuities one at a time or you can select all Annuities in a Forecasting Period.
To Complete one Annuity at a time:
- Click a Revenue Period (blue) or a Cost Period (Orange) on the Gantt to open the Complete Annuity
- If the Annuity began mid-month, and you do not wish to Complete the whole month, you can uncheck a box next to the relevant Period.
- Click .
This sends the Revenue or Cost for Approval. Completed Periods show as green in the Gantt.
To Complete Revenue Periods and Cost Periods at the same time, and/or to Complete Cost and/or Revenue for multiple Annuities at the same time:
- Click the Month you wish to Complete.
- In the pop up, you can uncheck any Cost or Revenue Periods you do not wish to Complete.
- Click .
This sends the Revenue and/or Cost for Approval. Completed Periods show as green in the Gantt.
|Note, Annuities are calculated using anniversary months, rather than calendar months. This means that where an Annuity starts or ends mid-month, the Cost, and Revenue will be calculated on a pro rata basis.
An Annuity starting on 12th April would have anniversary months from 12th April - 11th May, 12th May - 11th June etc. The monthly revenue is then pro-rated to each day based on the length of the anniversary month, so for the anniversary month 12th April - 11th May, the length of the month is 30 days, of which 19 days is in April, and 11 days in May.
Therefore, the Recurring Revenue is not applied to calendar months (where Recurring Revenue will vary), but applies to the anniversary months. This ensures that when you invoice a number of months for mid-month Annuities, the amount is an exact multiple of the monthly rate.
You can invoice Annuities from the Delivery Engagement Menu.
- Navigate to the Invoices screen via the Financial Management sub-menu of the Engagement menu.
- Click .
- On the Create New Invoice screen, confirm the Invoice Date and Invoice Format.
- Uncheck any Invoiceable Elements that you do not wish to include.
- Click .
- Check the box next to the Invoiceable Items you wish to include.
Note that where an Annuity began Mid-Month, you can expand the month by clicking next to that month. You could then select only the first Period, if you need to Invoice up until a specific date.
- Click and proceed through the Invoicing Wizard.
Where you are using a Negative Annuity, you will be able to select both your original Annuity, and the Negative Annuity in Step 6 above, ensuring the customer is Invoiced for the correct amount.
Kimble provides out of the box reporting on Annuities. New Reports can be created, and existing ones customized using Salesforce’s Reporting tools. The out of the box Report provided is KDEL30 Contract Renewals.
This details all annuities with less than 60 days remaining on the contract. The report shows both revenue (e.g. license sales) and cost annuities (e.g. software expenditure).