Revenue is recognized when the value of the sales order is booked against the sales accounts defined against the sales order line. The booking happens when you post the invoice for the sales order line. It is at this point that the revenue of the sales order, the value booked against the sales account, can be deferred.

You can create the revenue contract automatically by using the auto-generate function when the sales order customer has been set up to use the auto-generate function. Alternatively, you can create the revenue contract manually using the revenue contract maintenance functions.