Billing · Daily operations · 5 min read

Defer revenue on an invoice

Move the revenue of an annual or multi-month product to a deferred revenue account and release it month by month.

Before you begin

• The feature Revenue recognition (deferral) is on.
• A revenue recognition policy is Active for the product, activated by a different person than the one who wrote it. See Billing policies.
• The invoice is posted and carries a line of the product.
• The policy names a deferred revenue account (a liability account, for example 2400) and a revenue account (an income account, for example 4000).

Steps

1. Open the posted invoice from Billing > Customers > Invoices.
2. Check the Deferred revenue field on the billing record. A dash means nothing is deferred yet.
3. Press Defer revenue.

Worked example

A support product SUPPORT-12M has a policy to recognise over 12 months, starting the first of next month. You post an invoice with AED 12,000.00 of it plus VAT.

An Accounting deferral of 12,000.00 over 12 months is created. Once it is approved in Accounting, 1,000.00 per month moves from deferred revenue back to revenue. The VAT is not deferred.

For a USD invoice, the amount deferred is in AED at the invoice rate: USD 1,000 at 3.6725 defers AED 3,672.50.

What happens next

• The billing record lists the deferred amounts.
• Pressing Defer revenue a second time does nothing: no second journal.
• Accounting approves the deferral and runs the monthly releases.

Good to know

• The start can be the invoice date, the date of supply, or the first of next month, as set in the policy.
• If the feature is switched off, Defer revenue is refused and the menu Revenue recognition is hidden. Deferrals already created keep releasing.
• If the account codes are wrong the policy is not accepted: 'Give the code of a liability account in this company.' or 'Give the code of a income account in this company.'
• Policies for products: 'No product NOPE in this company.' appears when a product code does not exist.
• Down payments invoiced through Sales post to revenue; Billing does not treat them as a liability.