FMV Changes made to Active Plans

When modifications are made to an active Contract, Ordway reallocates the change in revenue prospectively across all FMV-enabled Products on the Contract based on the Change Effective Date.

• If the date is in a current open period, revenue is updated for the remainder of the contract (see below example).
• If the change is back-dated into a closed period, Ordway facilitates the creation of a catch-up entry in the first open period.

Example:

An annual Contract that has been invoiced for $8,800.00 was upgraded to an invoiced amount of $10,300.00 after two months of service. The Fair Market Value of all Products on the Subscription total $13,000.00

After the change is made on Mar 1, there is $8,833.33 remaining on the contract to recognize (earn) 

• $10,300 - ($733.33 * 2 months) = $8,833.33

The revenue allocation value will need to be recalculated for each Product following the change:

• Revenue allocation value prior to change:
  • Product A: 4,000/10,000 = .4
  • Product B: 6,000/10,000 = .6
• Revenue allocation value after the change:
  • Product A: 4,000/13,000 = .3077
  • Product B: 6,000/13,000 = .4615
  • Product C: 3,000/13,000 = .2308

Read more about Fair Market Value.