What is leading performance obligation in SAP FI-RA - Revenue Accounting?

SAP Term: leading performance obligation

• Component: FI-RA

• Component Name: Revenue Accounting

• Description: Performance obligation to which at least one additional performance obligation is assigned.

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• Key Concepts: 
  Leading performance obligation is a term used in SAP FI-RA Revenue Accounting. It refers to the obligation of a company to deliver goods or services to a customer before the customer pays for them. This type of obligation is typically used when a company is providing goods or services on credit terms. 
  
  How to use it: 
  In SAP FI-RA Revenue Accounting, leading performance obligations are recorded as liabilities in the company’s balance sheet. The amount of the liability is equal to the estimated value of the goods or services that will be delivered to the customer. When the customer pays for the goods or services, the liability is reduced and revenue is recognized. 
  
  Tips & Tricks: 
  When recording leading performance obligations in SAP FI-RA Revenue Accounting, it is important to ensure that the estimated value of the goods or services being delivered is accurate. This will ensure that the liability recorded in the balance sheet is accurate and that revenue is recognized correctly when payment is received. 
  
  Related Information: 
  Leading performance obligations are similar to deferred revenue, which is also recorded as a liability in SAP FI-RA Revenue Accounting. Deferred revenue occurs when a customer pays for goods or services before they are delivered. The difference between leading performance obligations and deferred revenue is that with leading performance obligations, the customer does not pay until after delivery, while with deferred revenue, payment occurs before delivery.