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Deferred Revenue for 1 month

  • 4 October 2022
  • 3 replies
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Our client has a few cash receipts every month that need revenue deferred until the next month. Would the deferred revenue module be over kill for this? I looked into the module and it mainly deals with schedules so I am not sure if it would be the best solution for them.

 

Example:

They receive the payment is September for $10K. 

DR - Cash

CR - Deferred Revenue

 

They receive the $10k invoice in October and apply the payment:

DR - Accounts Receivable

CR - Revenue

DR - Deferred Revenue

CR - Accounts Receivable

 

I was able to create a few work arounds for them but they haven’t been completely happy with them.

The first was that they enter the receipt of cash through the banking module when they import the bank transactions. Then, the next month, they enter the invoice and reverse with a credit memo but change the revenue account when they create the CR. They didn’t care for this because it is not a true representation of what is being done which is paying it.

 

The other resolution is to create a prepayment in AR in October but change the AR account to Deferred Revenue. Then in the next month, create the invoice and change the AR account to Deferred Revenue. AR never gets hit and the other accounts balance. They don’t like this because it does not hit AR 

 

It would be nice to have some ability to modify the GL before it gets posted so they can do this. Not sure what method is the right to push forward or if anyone else has some ideas. 

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Best answer by Laura02 5 October 2022, 14:24

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Hello,

I think you can handle your client’s limited deferred revenue entries without purchasing the full feature by using the Deferred Revenue account in place of the regular AR account on the advance payment, then using the regular AR account on the Invoice.  I’ve attached the steps.

 

 

Userlevel 3
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@laura01 That is exactly what I need! Thank you! I did realize that the applying of the prepayment would generate a transaction as well. This works perfectly. 

Userlevel 1

@rebeckamckinney53 I just came across this topic while looking for something related to deferred revenue, and wanted to add a comment, for your scenario I would use native functionality of prepayments. This feature handles all the entries without any effort on EU. the key is to make sure prepayment GL account is set in the customer GL tab, when posting receipt use prepayment type document, the entry is debit cash credit prepayment, then when ready to invoice credit income, debit AR trade, and apply payment it debits prepayment / credit AR trade. 

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