Contract‑to‑cash in Workday lives primarily in Workday Revenue Management and Customer Contracts. The goal is simple: capture contract terms once, then let Workday automate billing and revenue recognition in a way that is compliant with standards like ASC 606 / IFRS 15 and understandable to Finance and audit. When the design is weak, you see manual invoices, spreadsheets for revenue schedules and constant reconciliations. When it is strong, quotes from CRM become contracts, contracts become billing schedules, and revenue flows without surprises.
This guide walks through how to think about Revenue Contracts, Billing Schedules and Revenue Recognition so contract‑to‑cash actually works end to end.
Step 1: Understand the core contract-to-cash objects
Before configuring anything, clarify the key objects in Workday Revenue Management:
- Customer – the party you invoice and recognize revenue from.
- Customer Contract – the central record of what you have sold, for how much, and over what period. It can contain multiple Contract Lines.
- Contract Line – a specific promised good or service (for example, annual subscription, implementation services, usage-based fees).
- Billing Schedule – defines when and how much to bill under each Contract Line.
- Revenue Recognition Schedule – defines when and how much revenue to recognize under each Contract Line, often separate from billing.
Think of the Customer Contract as the “single source of truth” for both billing and revenue. It links CRM/quote data to GL outcomes through automation.
Step 2: Design Customer Contracts that reflect real products and services
Your Customer Contract structure should reflect how you actually sell.
Design considerations:
- Contract types
- Subscriptions or SaaS.
- Time & materials or milestone‑based services.
- Fixed‑fee projects.
- Usage‑based or consumption contracts.
- Contract line setup
- Integration with CRM
- For many organizations, CRM (often Salesforce) drives quotes and orders that feed Workday as Customer Contracts. Set clear mapping between products in CRM and Contract Lines in Workday.
Good patterns:
- Keep contract lines granular enough to support different billing and revenue patterns, but not so granular that you create unmanageable volume.
- Capture key dates (contract start, end, renewal) and terms (billing frequency, discounting, one‑time vs recurring) as structured fields rather than free text.
A well-designed contract structure is the foundation for clean billing and revenue rules.
Step 3: Build billing schedules that match cash realities
Billing Schedules turn contract lines into invoices. They answer “when do we send invoices and for how much?”
Common billing patterns:
- Upfront / prepaid – bill full or partial contract value at the start.
- Periodic – monthly, quarterly or annual recurring invoices for the duration of the contract.
- Milestone‑based – invoices triggered when milestones or events are reached.
- Usage‑based – billing based on actual consumption (for example, units, transactions, hours).
In Workday:
- You configure billing schedules at the Contract Line level, often using templates or schedule types (for example, “Standard Monthly”).
- Workday generates Customer Invoices according to the schedule and posts them to AR and the GL when approved.
Best practices:
- Align billing schedules with your cash flow strategy and customer expectations: for example, annual upfront billing for subscriptions vs milestones for implementation.
- Use standard schedule types wherever possible (e.g., monthly, quarterly) to minimize custom schedule noise.
- Ensure invoices generated from billing schedules clearly reference the contract and lines so collections and reporting stay aligned.
Billing schedules are about cash—but they are not the same as revenue.
Step 4: Separate billing from revenue with robust recognition schedules
Accounting standards like ASC 606 and IFRS 15 require that revenue be recognized when performance obligations are satisfied, not necessarily when cash is billed or collected.
Workday supports this through Revenue Recognition Schedules:
- Configured per Contract Line (or group of lines) to define how revenue is spread over time or events.
- Can be time‑based (for example, straight-line monthly over the contract term) or event/usage‑based (for example, when services are delivered or usage occurs).
Recognition schedule patterns:
- Subscription / SaaS – often straight-line revenue over the service period, even if billed upfront.
- Implementation services – revenue tied to milestones, timesheets, or percent complete.
- Usage‑based – revenue recognized according to usage transactions (for example, units consumed).
In Workday:
- Use the Create Revenue Recognition Schedule for Customer Contracts process to generate schedules for contract lines according to a chosen template (e.g., standard monthly).
- Workday generates revenue recognition installments that post to the GL, moving amounts from Deferred Revenue to Revenue.
Critical point: Billing schedules drive AR and cash; revenue schedules drive the P&L. They must be linked but not identical.
Step 5: Automate allocation and multi-element arrangements
Many contracts bundle multiple performance obligations (for example, software license, implementation, and support) with a single price. Workday supports revenue allocation across Contract Lines to comply with standalone selling price guidance.
Capabilities:
- Allocate contract consideration across multiple Contract Lines based on their standalone selling prices or relative values.
- Adjust revenue schedules per line while leaving billing schedules as agreed with the customer.
Usage:
- For bundled deals, set each performance obligation as a separate Contract Line with its own revenue rules.
- Use Workday’s allocation tools to spread total contract price across lines in a compliant way.
This allows, for example, more revenue to be allocated to implementation early and less to subscription, even if billing is flat or front‑loaded.
Step 6: Integrate contract-to-cash with projects and AR
Contract‑to‑cash does not live in isolation:
- Projects – For services and billable projects, link Projects/Tasks to Contract Lines so time, expenses and costs drive billing and revenue.
- Accounts Receivable – Customer Invoices from billing schedules flow into AR for collections, dunning and cash application.
- General Ledger – Revenue and deferred revenue postings flow into the ledger with proper Revenue Categories and Worktags (Customer, Region, Product, etc.).
Best practices:
- Make sure Customer Contracts, Projects and Customers are consistently tagged with key Worktags (Sales Region, Product Line, Segment) to support management reporting.
- Ensure AR and Revenue teams share a view of contract statuses, invoice schedules and revenue schedules to coordinate on modifications and renewals.
This integrated view turns Workday into a genuine contract‑to‑cash platform rather than just a billing tool.
Step 7: Governance, modifications and renewals
Customer contracts evolve—renewals, upsells, partial terminations, scope changes. Your design must handle contract modifications cleanly.
Governance points:
- Use consistent processes for amendments—new Contract Lines vs modifying existing ones vs creating new contracts for expansions.
- Understand how modifications should be treated under your revenue policies (prospective, retrospective, or blended).
- Maintain audit trails: Workday tracks contract versions, approvals and schedule changes; align this with your internal SOX/ICFR controls.
Reporting and controls:
- Monitor reports on Contracted vs Billed vs Recognized amounts per contract and per portfolio.
- Use exception reports to find contracts with no active revenue schedule, unusual allocation patterns or missing billing schedules.
When governance around contracts, billing schedules and revenue recognition is strong, finance and audit trust the system’s numbers and can trace every P&L impact back to a contract line.
