Deferred Revenue

Hi there. How should I go about recording deferred revenue on the Financio system?

As an example, I issued an invoice for RM5,000 to a customer on 25th December 2018 - and the customer pays me cash, so I add the customer payment in the system as well. However, the invoice was issued for services to be performed in March 2019. So I will need to make some adjustments to ensure that the RM5,000 is recognized as revenue in March 2019 when the services are performed. Based on the default Financio set up, the RM5,000 was recognized as revenue on the day the invoice was issued i.e. 25th December 2018.

However, I cant seem to be able to do it. I don't see how to reduce "Current Year Earnings" when creating a new journal entry whilst making an entry for a new Deferred Revenue liability account.

Any help will be appreciated. Thank you and happy new year!

Official comment

Benjamin George

January 02, 2019 02:15

Hi Shaun Teo,

Thank you for the question.

You may explore the following:

When issuing the invoice, have the invoice recorded under your Deferred Revenue account.
When the service is rendered, create the following journal entry: DR - Deferred Revenue, CR - Sales Income.

Regards,
Travis Tai - Community Manager

Shaun Teo

January 02, 2019 02:24

Hi Travis,

Thank you for the response that does help.

Just to confirm, for Step 1 where I issue the invoice under my Deferred Revenue Account - this means that when I select the Item when creating the invoice, I select my Deferred Revenue Account and then key in the name and description accordingly? Instead of selecting one of my existing Products / Services.

January 02, 2019 06:40
Edited

Yes, you may do that. Alternatively, you may create a duplicate product/service and have it setup to the deferred account. That way you will still be able to issue your invoices quickly.

Travis Tai - Community Manager

Deferred Revenue

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