Get Started with Salesforce Billing Implementation with Hands-On Project
This Comprehensive document helps you to Get Started with Salesforce Billing with images for each step to give you 100% clarity.
Document Structure
- How Salesforce CPQ and Billing Fit Together.
- How to Setup Salesforce Billing Developer Org
- Setting Up Accounting in Salesforce Billing
- Building Blocks of Salesforce Billing
- Project Implementing Salesforce Billing for T-Mobile in Different Regions (UK, US, India)
- Step by Step Implementation
- Interview Questions
This diagram shows each stage in the Salesforce CPQ and Billing process showing the complete Lead to Payment Process (QTC).
1. First step starts from Lead getting generated. It is potential customer who is interested in the product or service.
For Example, you go to T-Mobile’s website and fill out a form showing interest in a new mobile plan.
2. When the lead is qualified. It means that looks like customer is serious about buying the product or service then lead is converted into Account, Contact, Opportunity.
3. Based on the opportunity, a quote is created to offer the potential customer a formal proposal.
4. Quote line is a line item in the quote that details individual products or services and their pricing.
5. Once the customer accepts the quote, an order is created.
6. Each product or service from the order is linked to an order product.
The order product refers to the specific products or services being purchased as part of the order.
7. The order is linked to a contract that outlines the terms and conditions.
8. An invoice is a bill that the customer receives, requesting payment for the products or services. After the order is processed, an invoice is generated.
For example, T-Mobile can send an invoice to the customer for the first month’s charges on the data plan.
9. Invoice lines are individual items on the invoice that break down the charges.
Each order product is reflected as an individual line item on the invoice.
10. Once the customer pays, the payment is recorded in the system.
11. Payment allocation is the process of applying the payment to the specific invoice lines. The payment is allocated to settle each of the charges on the invoice.
How to Setup Salesforce Billing
Developer Org
Go to the Link and fill out the sign-up form.
It will take you to the installation page. Once Installation is complete, new org will get created with Salesforce CPQ and Salesforce Billing Packages.
Go to Setup->Installed Packages to view it.
You will be able to see Salesforce CPQ, Salesforce Billing in the App Launcher
Where
Where Salesforce Billing Begins
Before we can even start using Salesforce Billing, these foundational steps need to be set up.
• Legal Entity
• Finance Book and Finance Period
• GL Account, GL Rule, GL Treatment
• Tax Rates, Tax Rule and Tax Treatment
• Billing Rule and Billing Treatment
• Revenue Recognition Rule and Revenue Recognition Treatment
Object Data Model
Understanding the Building Blocks of Salesforce Billing
In this section, let’s break down the key building blocks before moving to implementation stage.
1. Legal Entities
A Legal Entity represents a company or a part of the company that has legal standing in a specific region. This separation is crucial because each country has its own legal and financial requirements. It is the starting point where Salesforce Billing Starts.
For Example, T-Mobile USA is a separate legal entity in the United States. T-Mobile India operates under Indian laws as its own legal entity.
2. Finance Books and Periods Finance Books are like financial diaries that organize and record all financial transactions. Finance Periods are specific timeframes (like a month or a quarter) during which these transactions are tracked.
Financial Books are of two kinds: Revenue and Accounting.
For Example, T-Mobile USA Finance Book will record all financial transactions for the US operations. T-Mobile India Finance Book will track transactions in India.
3. General Ledger (GL)
GL Accounts categorizes financial transactions like sales, shipping charges etc. It is generally handled outside Salesforce as part of
accounting software or ERP system. GL Credit and Debit are necessary in order to create GL Treatment.
Example Use Case of GL Account
GL Rules link these accounts to specific financial processes.
GL Treatments are the detailed instructions on how these rules should be applied. One Rule can have multiple treatments.
For example, when a customer in the USA buys a mobile phone, the revenue is recorded under the Sales Income GL Account. If there are any shipping costs, they are recorded under the Shipping Charges GL Account.
4. Tax Configuration
Tax Rates define the tax percentage applied to products or services in each region.
Tax Rules determine how taxes are calculated.
Tax Treatments apply these rules to specific transactions.
Example:
T-Mobile USA might apply a 7% sales tax on data plans.
T-Mobile UK might apply 20% VAT.
T-Mobile India could apply 18% GST on the same service.
3rd Party Tools like Alvara, Vertex is used to calculate accurate taxation.
5. Billing Rules Billing Rules determine how and when invoices are generated.
Billing Treatments apply these rules to specific transactions.
T-Mobile USA might have a billing rule that invoices customers at the end of each month for their data usage.
6. Revenue Recognition Rule and Treatment Revenue Recognition Rules dictate how revenue should be recognized (recorded) over time.
For example, you purchased T-Mobile data plan worth ₹200. Only when you have that data plan started, does T-Mobile mark that ₹200 as truly earned.
So basically, Revenue Recognition is the practice of waiting until a sale’s obligations / responsibilities are met before considering the money from that sale as earned revenue.
Revenue Recognition Treatments apply these rules to specific transactions. One rule can have multiple treatments.
Revenue Recognition method is required to create Revenue Recognition Treatment.
In Summary:
• Legal Entities are the first thing we set up.
• Finance Books and Periods follow to organize financial records.
• General Ledger comes next to categorize and manage financial transactions.
• Tax Configuration ensures compliance with local tax laws.
• Billing Rules determine how invoices are generated.
• Revenue Recognition ensures revenue is reported accurately.
Project: Implementing Salesforce Billing for T-Mobile in Different Regions (UK, US, India)
Let’s take a small project for setup to enhance the learning.
Project Overview
T-Mobile operates in three different regions:
• United States (US)
• United Kingdom (UK)
• India
Each region has its own legal requirements, financial practices, and tax regulations. Let’s set it up in Salesforce Billing.
Brief Overview of Steps
I am giving a concise summary of the step-by-step implementation, so it is easy to understand before we deep dive into implementation.
Step 1: Set Up Legal Entities for each region
Step 2: Create Finance Books for each region
Step 3: Set Up Finance Periods for each region related to Finance Books
Step 4: Establish General Ledger
- Create GL Accounts for key financial activities (Sales Income, Shipping Charges).
- Create GL Rules that reference these GL Accounts.
- Set up GL Treatments within GL Rules
Step 5: Configure Tax Rates for Each Region
Step 6: Set Up Tax Rules and Treatments for Each Region
Step 7: Set Up Billing Rules and Treatments
Step 8: Set Up Revenue Recognition Rules and Treatments for each region.
Step-by-Step Implementation
This Section Covers Detailed Implementation for T-Mobile Operating in three Different regions (US, UK, India). Image is added for every single step.
Step 1: Set Up Legal Entities
Create Legal Entities for each region T-Mobile operates in.
US: T-Mobile USA
UK: T-Mobile UK
India: T-Mobile India
Step 2: Create Finance Books
Create a Finance Book for each region:
Set the Period Type to “Accounting” for tracking invoices and payments.
Set the Finance Period Duration to “Monthly.”
T-Mobile USA Finance Book
T-Mobile UK Finance Book
T-Mobile India Finance Book
Step 3: Set Up Finance Periods
Track financial transactions within specific timeframes.
Financial Period USA
Financial Period UK
Financial Period India
Step 4: Establish General Ledger
- Step 1: Create the GL Accounts (Sales Income, Shipping Charges).
- Step 2: Create the GL Rules that reference these GL Accounts.
- Step 3: Set up GL Treatments within the GL Rules to define specific financial processes.
Step 1: Create the GL Accounts (Sales Income, Shipping Charges).
Sales Income
Shipping Charges
Similarly Create for UK and India.
Step 2: Create the GL Rules that reference these GL Accounts.
GL Rule for USA
GL Treatment US Related to GL Rule USA
GL Rule for UK
GL Treatment UK Related to GL Rule UK
GL Rule for India
GL Treatment India Related to GL Rule India
Step 5: Configure Tax Rates
Apply the correct tax rates for products and services in each region.
T-Mobile USA Tax Rate (7% Sales Tax)
T-Mobile UK Tax Rate (20% VAT)
T-Mobile India Tax Rate (18% GST)
Step 6: Tax Rule and Tax Treatment for Each Region
Tax Treatment US Related to Tax Rule US
Tax Rule UK
Tax Treatment UK Related to Tax Rule UK
Tax Rule India
Tax Treatment India Related to Tax Rule India
Step 7: Billing Rule and Billing Treatment for Each Region
Step 1: Create Billing Rules
Step 2: Create Billing Treatment
Set up Billing Rules that dictate how and when invoices are generated.
Billing Rule for T-Mobile USA
Billing Treatment for USA Related to Billing Rule USA
Billing Rule for T-Mobile UK
Billing Treatment for UK Related to Billing Rule UK
Billing Rule for T-Mobile India
Billing Treatment for India Related to Billing Rule India
Step 8: Set Up Revenue Recognition Rules
Ensure revenue is recognized accurately according to regional regulations.
Step 1: Create Revenue Recognition Rules
Step 2: Create Revenue Recognition Treatment
T-Mobile USA Revenue Recognition Rule
T-Mobile USA Revenue Treatment Related to USA Revenue Recognition Rule
T-Mobile UK Revenue Recognition Rule
T-Mobile UK Revenue Treatment Related to UK Revenue Recognition Rule
T-Mobile India Revenue Recognition Rule
T-Mobile India Revenue Treatment Related to USA Revenue Recognition Rule
Set of Interview Questions
This section covers list of interview questions related to Salesforce Billing
What is a Legal Entity in Salesforce Billing? A Legal Entity represents a company or part of a company that has legal standing in a specific region. It is necessary for managing different tax rules, billing rules, and financial operations depending on the region where the company operates.
Example, T-Mobile operates in multiple regions, such as the USA, UK, and India. They need to create separate legal entities for each region in to comply with local tax laws and regulations. For instance, T-Mobile USA would have a different legal entity compared to T-Mobile India.
What is the purpose of Finance Books and Finance Periods?
Finance Books organize and store financial periods, which represent specific timeframes (like a month or a quarter) during which financial transactions are recorded. This helps in keeping track of invoices, payments, and revenue recognition over time.
T-Mobile USA Financial Book.
Financial Period Related to US Financial Book
What is the use of Period Type in Financial books?
Accounting: This is used to manage and track financial transactions such as invoices, payments, and allocations.
Revenue: This is used to track revenue recognition over the period. It focuses on the revenue generated and recognized during the specified timeframe.
For example, in case of T-Mobile If you are tracking the revenue generated from selling mobile data plans over a certain period, you would select “Revenue.”
What is the use of Finance Period Duration in Financial books?
This field sets the length of the financial period, such as monthly, quarterly, or custom durations. Monthly: The financial period is set to one month. All transactions within this month will be grouped and reported within this financial period. Custom: Allows the user to define a specific time range that doesn’t necessarily fit into a standard month or quarter.
Example: For T-Mobile, if you are tracking the revenue or financial transactions for each month, like all revenue and expenses related to mobile plans sold in January 2024, you would select “Monthly.”
What are GL Accounts and why are they important?
GL (General Ledger) Accounts are used to categorize financial transactions for reporting purposes. They help in summarizing different types of financial activities, such as sales income, accounts receivable, and taxes payable. T-Mobile would need to set up GL Accounts for various financial transactions, such as “Sales Income” for revenue from data plans and “Shipping Charges” for any costs incurred during mobile delivery.
Sales Income – USA GL Account
Shipping Charges – USA GL Account
How are Tax Rates managed in Salesforce Billing?
Tax Rates defines the amount of tax applied to a product or service in a specific region. They are linked to Legal Entities and can be managed manually or through an integration with tax engines like Avalara.
For example, in the USA, T-Mobile may apply a 7% tax rate on data plans, whereas in India, the rate might be 18%. These tax rates makes sure that T-Mobile complies with local tax laws when billing customers.
Example: Tax Rate for US Region is 7%
Example: Tax Rate for India Region is 18%
What happens when an Order Product is created in Salesforce Billing?
When an Order Product is created, it inherits the Billing Rule, Tax Rule, and Revenue Recognition Rule from the parent product. Salesforce Billing then matches these rules with the Legal Entity specified on the Order Product to determine the correct billing and tax treatment.
For Example, When T-Mobile creates an Order Product for a customer in the USA, the Order Product will inherit the USA-specific Billing Rule, Tax Rule, and Revenue Recognition Rule.
What is the importance of the Billing Rule in Salesforce Billing?
A Billing Rule determines how and when an invoice should be generated for a product. It includes the billing treatment, which is linked to a specific legal entity, finance book, and GL rule.
For example, for T-Mobile’s data plans, the Billing Rule might specify that customers are billed at the end of each month for their data usage.
What is the purpose of a Revenue Recognition Rule in Salesforce Billing?
A Revenue Recognition Rule determines how and when revenue from a sale is recognized in the company’s financial records. T-Mobile might use a Revenue Recognition Rule to recognize revenue from data plan subscriptions monthly, as customers use the service. This helps in accurately reflecting revenue earned in each financial period.
How does Salesforce Billing handle multiple finance periods for different legal entities?
Salesforce Billing allows the creation of multiple finance periods within a Finance Book, each linked to a specific legal entity. This setup ensures that financial transactions are recorded accurately for each legal entity across different time periods.
What happens if you try to update Legal Entities or Rules on activated Order Products?
Once an Order Product is activated, Legal Entities and Rules cannot be updated. This restriction ensures the integrity of the billing and financial processes, preventing changes that could lead to discrepancies in financial reporting.
What does the period status “Open” and “Closed” in a finance period indicate?
The period status field in a finance period indicates whether the period is currently active and whether it can accept new financial transactions.
When a finance period is marked as “Open” it is actively receiving new records. When a finance period is marked as “Closed” it no longer receives new records. This status is used after all transactions for the period have been finalized. The concept is similar to accountants “closing their books” at the end of a month or year.