Choosing Your Revenue Recognition Tool in SAP

As of 2023, there are two main options when it comes to selecting a RAR tool, and it mainly depends on whether you’re using an older SAP ERP system or SAP S/4HANA.


For SAP S/4HANA, if you’re on version 1809 or later, RAR will come integrated with the system, whereas for older SAP S/4HANA users, the same rules as for SAP ERP apply. So, for SAP S/4HANA users, the decision comes down to which features of RAR they will use (will they activate optimized contract management [OCM] and optimized inbound processing [OIP] or not?), while for SAP ERP users, the decision might be more complicated, and they would need to look at feature packs and decide which one best suits their needs.


In the following sections, we’ll give a detailed overview of which features come with which versions so you can make an appropriate decision.



As of SAP S/4HANA 1809, the former SAP Revenue Accounting and Reporting add-on has become an embedded part of SAP S/4HANA. This relates to product version SAP Revenue Accounting, including software component version REVREC. The RAR functionality still needs to be integrated into operational components that send order and billing information to revenue accounting. Since SAP S/4HANA 1809, the following operational components, or products, support integration with RAR:

For the integration with sales and distribution, the integration functionality previously deployed through the software component SAP Sales and Distribution Integration with SAP Revenue Accounting and Reporting 1.0 (SAP SALES INTEGR SAP RAR 1.0) has also been added to the SAP S/4HANA 1809 stack and the SAP S/4HANA releases that followed.


Starting from SAP S/4HANA release 1909, customers can use an optimized version of the revenue accounting contract management. In SAP S/4HANA 2020, SAP added an optimized version of inbound processing. Optimized contract management (OCM) focuses on performance optimizations and additional features, such as day-based contract modifications. Optimized inbound processing (OIP) allows for real-time processing of operational documents. The Customizing for OCM and OIP can be found under Revenue Accounting > Revenue Accounting Contracts and Revenue Accounting > Inbound Processing.


Note: For new implementations, SAP recommends considering the optimized SAP S/4HANA capabilities of contract management and inbound processing, as future investments will mainly focus on these new capabilities.


Since offering the optimized versions, the existing contract management as known under SAP Revenue Accounting and Reporting 1.3 and SAP S/4HANA is now referred to as contract management (classic; or classic contract management [CCM]). The inbound processing will be referred to as inbound processing (classic). In Customizing, you can find the settings for CCM and inbound processing (classic) under Revenue Accounting > Revenue Accounting Contracts (Classic) and Revenue Accounting > Inbound Processing (Classic).


Starting with SAP S/4HANA release 2021, customers can use the direct posting feature for posting management. Direct posting offers closer integration with the Universal Journal by posting directly into the Universal Journal without the revenue accounting subledger and smaller posting granularity due to posting by revenue accounting contract.


Starting with SAP S/4HANA release 2021, the parallel processing framework (PPF) used by program FARR_REV_TRANSFER (Transaction FARR_REV_TRANSFER) and program FARR_CONTRACT_LIABILITY (Transaction FARR_LIABILITY_CALC) has been adapted to the new SAP S/4HANA PPF (Transaction SHDB PFW). The old PPF based on the banking service is still used by other RAR programs such as RAR posting (Transaction FARR_ REVENUE_POSTING), RAI transfer (Transaction FARR_RAI_TRANS), and RAI processing (Transaction FARR_RAI_PROC).


As the new Transaction SHDB parallelization framework (PFW) uses a different log mechanism than the old PPF, the job logs of Transaction FARR_REV_TRANSFER and Transaction FARR_LIABILITY_CALC are no longer available in Transaction BANK_PP_ MONITOR. Using Transaction SHDB PFW, you can use report SHDB_PFW_SUPPORT to export the monitor information of a given instance. The application logs generated by those programs aren’t changed. You can still view the application logs using Transactions SLG1 or SLGD.


In addition to these changes, there was a significant rework of the predelivered SAP Fiori apps and analytical reports. Users who used (or evaluated) are aware that in version 1.3 of SAP Revenue Accounting and Reporting, SAP delivered only a few reports called sample reports that had been developed using Web Dynpro technology. With SAP S/4HANA, the design of reports has changed, they are developed with SAP Fiori technology, and a substantial number of reports was added to the standard library.


When coming to SAP S/4HANA, the most important point is that RAR is an integral part of the SAP S/4HANA stack, which means that RAR is the main tool for revenue recognition; users can’t rely on Transaction VF44 anymore. In addition, the main decision that needs to be made is whether to use OCM or CCM and inbound processing (depending on their version of SAP S/4HANA). Here, the decision is individual and despite the fact that optimized versions will be developed in the future, there are still limitations in using. An even stronger case for keeping the classic functionality is if the customer migrates from SAP ERP with SAP Revenue Accounting and Recognition to RAR in SAP S/4HANA. The impact on enhancements and developments done in the classic environment can be considerable and even lead to a complete reimplementation of RAR.



RAR is delivered on SAP ERP as an add-on component called SAP Revenue Accounting 130 (REVREC 130). The minimum system requirement for this add-on to be implemented is SAP ERP enhancement package (EHP) 5. Similar to SAP ERP, RAR is delivered as an add-on component on SAP S/4HANA on versions up to release 1709.


Additional versions of RAR were called support packs (SPs) until version 03, where the naming was changed to feature pack (FP) to version 07. Later, naming was changed back to support pack on which the current new versions are delivered (version 16 was the latest at time of writing).


The initial SP was mainly used when upgrading from versions 1.1 or 1.2. The first standalone version issued for the standalone use of RAR was version SP03 in August 2017. In this version, several program corrections were issued related to integration with results analysis and the now retired Hybris billing. The main change implemented was related to the contract modification process and enforcing the change of estimates instead of the prospective change for POBs, which were value relevant, and event type CI (customer invoice). This correction was done mainly for technical reasons while computing the remaining SSP. Another major correction with SP03 was related to how database updates are done. It had been noticed in previous versions that data inconsistency can occur due to different triggers for database updates. This was solved by performing only one COMMIT once all processes in the ARL are completed. This is the main reason customers are strongly recommended to go to this SP.


Feature pack 04 (FP04) was issued in December 2017, and was the first to use the FP name. The FP is very similar to the SP, but it also contains nonmandatory and nondisruptive deliveries. The most important feature that came with this FP is the ability to do customized logic for calculating contract assets and contract liabilities (CA/CL). The default is that CA/CL is calculated on the contract level, but the option to calculate it on the POB level is also available. SAP Note 2560937 was issued with a description and information related to calculating CA/CL on the POB level. Besides this option, a BAdI to perform custom calculation of CA/CL was delivered and can be implemented by the user.


FP05 was delivered March 2018 based on customer requests. The main focus was on migration and transition topics, plus performance improvement when needing to process millions of contracts with many POBs. With this FP, for the first time, there were recommendations on the number of POBs per contract (see SAP Note 2551667) and items in BRFplus. In addition, the following features were introduced:

  • Reprocessing contracts and account determination
  • Calculate and post exchange rate differences for the fixed rate method
  • Detailed inflight and data validation checks
  • Improved flexibility for the contract modifications process
  • Navigation from a financial accounting document to a RAR contract

FP06 came in July 2018, and was published with main corrections in the integration area with sales and distribution. Processes that were covered include the intercompany sales process, which came as an option in Customizing; the drop shipment process; and reconciling operational data with RAR.


The following additional functionalities were enabled as well:

  • Enabling change documents for account assignments
  • Allowing POB cancellation of a compound structure separately
  • POB cancellation and conflict management
  • BAdI: Log POB Data
  • Additional contract shift scenarios
  • Overfulfillment during returns processing
  • Applying contract change to earliest open period
  • Improving the remaining SSP calculation flexibility
  • Improving the remaining amount calculation formula for allocation to difference condition types
  • Performing SSP range validation during contract modification

FP07 was delivered in November 2018, and it represents a major step forward in terms of added functionalities. The most important features are new fulfillment types: call-off order, proof of delivery, and goods in transit. Beside these, flexibility is added to existing processes in contract management such as allowing a negative allocated price, allowing one POB in compound to be nondistinct, and so on.


FP08 and FP09 were mainly issued to cover program bugs and improve overall stability of the solution. No major new functionalities were delivered.


SP10 was delivered in September 2019, and besides overall program corrections, it contained a few new features that might become useful to customers:

  • BRFplus trace tool: This development is used to visualize the full decision path of the BRFplus function calls during creation of a POB from source RAI data. The BRFplus trace can be used by customers to explain their own customization as well as a support engineer during problem analysis. Note that this trace is only available for BRFplus usage in inbound processing.
  • RAI monitor enhanced view: A new selection criterion has been added to Transaction FARR_RAI_MON that allows you to display partially processed RAIs or processed and partially processed RAIs together.

SP11 and SP12 again mainly referred to program corrections and improvements.


Next, SP13 was delivered in November 2020, with new features and program corrections:

  • New functionality to manage migration: This new functionality provides a guided procedure for migrating legacy data to RAR with a special focus on migrating data from sales and distribution revenue recognition. While leveraging the existing migration programs, it streamlines and safeguards the execution of this critical process.
  • Performance improvements for processing large contracts: There are certain limitations for running SAP Revenue Accounting and Reporting 1.3 with contracts of very large sizes. These limitations are described in SAP Notes 2616387 and 2551667. This can often lead to timeouts when performing basic tasks, such as opening the contracts in the SAP GUI or combining them. Within SP13, certain technical changes have been introduced to improve performance to allow users to process larger contracts.
  • Allow condition types with negative values: RAR provides the functionality to check whether a condition type of a particular POB has the same +/- sign. If the sign is different, an error message is raised. This functionality was introduced to prevent errors during a posting run in case a customer was using cost-based or combined profitability analysis. For certain custom processes (e.g., managing rounding differences), this could cause an issue. SAP now delivers functionality to allow configuration to specify which condition types can have both +/- signs for the same POB.

SP14, 15, and 16, which were delivered up to October 2022, brought upgrades of existing programs and minor features.


What we can see is that RAR was evolving in terms of new features mainly up to deadline for IFRS 15 adoption. After that, new features were coming to fill gaps that hadn’t been addressed previously. But mainly, program improvements and dealing with performance issues were constantly improved, which continues today.


For new users, it’s very much recommended to go straight to the latest version. However, existing users need to carefully evaluate which version to upgrade to. Here, going to the latest version needs to be carefully considered, and a decision should be made based on the number and type of custom developments the customer might have. Programs are constantly evolving, and possible upgrades might have an impact on existing developments. So before deciding which version to upgrade, users need to verify changes to programs beside checking features that are coming with the new version.


Editor’s note: This post has been adapted from a section of the book Revenue Accounting and Reporting with SAP S/4HANA by Sreten Milosavljević and Swayam Prabha Shankara.


Revenue Accounting and Reporting with SAP S/4HANA
Revenue Accounting and Reporting with SAP S/4HANA

Does your business provide contract-based sales or services? Then you need this comprehensive guide to recognizing your revenue in SAP S/4HANA! Whether you’re using classic revenue accounting and reporting (RAR) or optimized contract management (OCM), get step-by-step instructions to configure RAIs and contracts. Then post, reconcile, and report your revenue. Learn about administration and troubleshooting activities, see how to migrate from classic RAR to OCM, and take your first look at event-based revenue recognition. Everything you need for “rev rec” is here!

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