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Amortization

                                           (Industry Specific-Media Sales and Distribution)

IS stands for Industry specific solution which provides an end to end solution for the particular verticals.

Eg;

IS-Retail , IS- Media
IS-Oil , IS- Utilities
IS-Banking
IS-telecommunication
IS-automobile

Media Sales and Distribution module (MSD) is all about circulation and subscription of Print Products such as Main Newspapers, Magazines and Supplements.

Periodical sales and distribution is Subscribing news papers in regular intervals. Here the sales are directly with the end customer. Eg: Subscription on Daily or Friday-Saturday-Sunday or only Sunday etc.

For eg:

Periodical Sales & Distribution would mainly deal in creating Publication, Edition and Issue Masters, so that the same can be used by Media Advertising Management (MAM) module to create their booking units for which ads will be accepted.

Publication: The Times of India

Edition: The Times of India (Hyderabad)

Issue: The Times of India (Hyderabad) dated 01.01.09

Amortization:

Definition: Amortization in subscription renewal clears the payment amount received in advance on the liability account with the deliveries actually made (amortization installments / Prices).

Amortization only takes place for renewals. It is not relevant for period renewals Like: Magazines, Journals, and Weeklies etc because the purchase period is the same as the billing period in this kind of subscription.

Amortization is executed by a program located downstream from shipping. The system determines the revenue recognized, the amortization installment, from each delivery of an issue, the payment amount (from FI Account Receivable Accounting) and the amortization amount (total of the amortization installments for each renewal cycle) are posted to the monetary liability account for the renewal subscription.

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Example:

        Customer subscribed a news paper like New York Times or Cox News Paper with the service type Full / Friday to Sunday / Thursday to Sunday / Sunday only etc and opted for a monthly subscription. Paid an advance through payment card (Ezpay).This Paid amount is credited to deferred revenue account. We can see this payment details and previous cycle transfer amount in the payment amount column and in credit column in Liability Account tab as shown in fig 1.1 ($ 39.54).Based on the amortization plan the amortization installment will be determined. Amortization plan defines the service type with their prices like week day subscription price $ 0.25 and Sunday Subscription Price $1.22 as shown in Fig 1.1.Once the delivery is done the respective amount is debited from the credit amount column ($ 36.07) and credited to the amortization amount column ($ 3.47) as shown in fig 1.1 i.e. the delivered amount is debited from the deferred revenue account and credited to the revenue account.

Fig 1.1

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Amortization Plan

The system generates an amortization plan for the order item listing the amortization installments (prices) for each issue variant type based on the payment amount received. The system carries out amortization after each delivery according to the amortization installments, refreshing the amortization amount on the liability account for the subscription item. The total of all amortization installments in a purchase period clears the payment amount fully. The difference between the payment amount and the current amortization amount forms the basis for determining the expiration date.

Revenue Recognition

At the same time as it amortizes the liability account, the system defers the revenue recognized as shown in fig 1.1.

Integration

Amortization in subscription renewal is integrated with the monitoring in MSD and also incoming payment processing in FICA.

Orders for Amortization

The amortization program (RJKAMORTIZE) is scheduled for execution after each shipping run. Depending on whether amortization is to take place in one or more batch runs.

In addition to the pricing procedure for the purchase price, an amortization procedure must be defined in Customizing for pricing with the condition type for the amortization installment.

Path

Logistics-> Media Sales and Distribution -> Periodical Sales and Distribution ->Sales– >Liability Account ->Amortization -> Execute

Marking of deliveries

Once the amortization process is completed, the amortization marks the deliveries as follows:

Amortized: At least one order was amortized for the delivery.

Fully Amortized: All orders were amortized for the delivery.

Personal Experience:During my project I have come across typical issues related to amortization. There is no direct solution for any amortization issues. Basically the Media process is very critical and is integrated with several interfaces in every phase of the process; apart from that there are some regular background jobs running for each step of process. Once the back ground job is completed, if there are any errors you can find them in the spool, it’s called Logs. It’s very difficult to find the root cause for this kind of amortization/Media logs. Therefore we should be very strong enough in the Media Business process and even technically because each and every process in IS-Media is executed through batch jobs so the impact of the batch job is on the programs .We should be in a position to analyze technically to find the root cause and also a resolution for this kind of logs. There is more complexity in resolving the Industry Specific issues as the issues are not independent and correction of a step in the process cycle will lead to several errors in the next step in the process cycle and the solution given should not allow that to happen. Other wise it would lead to Nested Errors when we try to resolve a particular Issue. For example if you take “No amortization Installment found “ log there you can find 100 orders have  the same issue but the resolution is different for every single order; so every issue is challenging to find the resolution.

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