Deferred Revenue accounting
We issue invoices for annual fees say for £1200 for 1 years service but we do not want it to hit the Sales GL in full - what is the recommended procedure for handling deferred income? Without the need for doing manual monthly journals between a GL Liability > GL Sales for £100 every month
48
Replies
Hi Adam,
You could use a recurring sales invoices with a positive £100 (credit) going to GL sales and a negative £100 (debit) going to GL liability. The net amount of the invoice is nil so nothing would be posted to the account payable.
Leigh
You could use a recurring sales invoices with a positive £100 (credit) going to GL sales and a negative £100 (debit) going to GL liability. The net amount of the invoice is nil so nothing would be posted to the account payable.
Leigh
Unfortunately Xero does not support recurring journals. I like Leigh's suggestion and would like to extend it:
Step 1: Issue the original invoice with ALL the income coded to a Deferred Revenue account (make sure that this account is properly setup for sales taxes that you need to charge; don't worry about what the customer will see because they don't see the coding and they still get a single line invoice)
Step 2: Create a recurring invoice starting on the first day of the service cycle, and repeating monthly for the 12 months. As Leigh suggested, this should be for 1/12 of the annual fee, BUT I suggest that you make this non-taxable to avoid confusion later (so you will need to deduct the tax on the annual fee first and then divide by 12 - not sure how this works in UK, but in NZ a $1200 annual fee would include $156.52 of GST, which leaves $89.9566 per month after tax). The catch here is that you don't want this to show up on your Debtors statement so you can either treat it as an AP Invoice or use a dummy contact to keep it separate from the main receivables contact. If using an AR invoice your would use a + number (no tax) against the sales account and a - number against the deferred revenue account. Make sure that the invoice is set to be approved automatically but not sent.
Step 3: Best practice is to reconcile your deferred revenue account regularly to ensure that you have not missed anything and that you can justify the balance at the end of the year. You may also have rounding variances (my example above will create about a 4c variance for the year if I round up each month - not a biggie, but could get annoying if I have lots going through. One way to manage this is to use multiple deferred revenue accounts. If your contracts start at any time during the year (i.e., whenever you sign people up) then you might want to use a different Deferred Revenue liability account for each starting month - that way at the end of each 12 month cycle the account should be zero before the next round starts. In fact, using this approach you could create a single recurring invoice (step 2) for the entire month knowing that the revenue for that starting month is now fixed.
Hope that gives you (and others) some ideas to play with.
Step 1: Issue the original invoice with ALL the income coded to a Deferred Revenue account (make sure that this account is properly setup for sales taxes that you need to charge; don't worry about what the customer will see because they don't see the coding and they still get a single line invoice)
Step 2: Create a recurring invoice starting on the first day of the service cycle, and repeating monthly for the 12 months. As Leigh suggested, this should be for 1/12 of the annual fee, BUT I suggest that you make this non-taxable to avoid confusion later (so you will need to deduct the tax on the annual fee first and then divide by 12 - not sure how this works in UK, but in NZ a $1200 annual fee would include $156.52 of GST, which leaves $89.9566 per month after tax). The catch here is that you don't want this to show up on your Debtors statement so you can either treat it as an AP Invoice or use a dummy contact to keep it separate from the main receivables contact. If using an AR invoice your would use a + number (no tax) against the sales account and a - number against the deferred revenue account. Make sure that the invoice is set to be approved automatically but not sent.
Step 3: Best practice is to reconcile your deferred revenue account regularly to ensure that you have not missed anything and that you can justify the balance at the end of the year. You may also have rounding variances (my example above will create about a 4c variance for the year if I round up each month - not a biggie, but could get annoying if I have lots going through. One way to manage this is to use multiple deferred revenue accounts. If your contracts start at any time during the year (i.e., whenever you sign people up) then you might want to use a different Deferred Revenue liability account for each starting month - that way at the end of each 12 month cycle the account should be zero before the next round starts. In fact, using this approach you could create a single recurring invoice (step 2) for the entire month knowing that the revenue for that starting month is now fixed.
Hope that gives you (and others) some ideas to play with.
This has also been raised as a specific feature request - if it's a feature you like in Xero please vote for it: Future revenue / revenue recognition
Merged: Client payment in advance
Hi, I think this is a fairly simple query.
We bill clients on a monthly basis, however I have a client that wishes to pay their annual fee in advance. So I wondered how I account for this in Xero? Presumably I don't want the full amount to appear as income in April 2013, but rather have it spread out over the next 12 months?
If so, how would I treat this?
Appreciate your feedback.
Justin
Hi, I think this is a fairly simple query.
We bill clients on a monthly basis, however I have a client that wishes to pay their annual fee in advance. So I wondered how I account for this in Xero? Presumably I don't want the full amount to appear as income in April 2013, but rather have it spread out over the next 12 months?
If so, how would I treat this?
Appreciate your feedback.
Justin
Maybe you could journal it out each month.
I'm not an accountant, but this is what I would do:
Apply the excess as a "credit" to the first invoice. Then continue to issue monthly invoices as per normal, but pay them immediately from the credit balance.
This way you can still send the customer an invoice each month (with no amount payable).
The monthly invoices will recognise the revenue in each month in your income statement, while the (gradually dimishing) credit balance will show as a liability on your balance sheet.
Apply the excess as a "credit" to the first invoice. Then continue to issue monthly invoices as per normal, but pay them immediately from the credit balance.
This way you can still send the customer an invoice each month (with no amount payable).
The monthly invoices will recognise the revenue in each month in your income statement, while the (gradually dimishing) credit balance will show as a liability on your balance sheet.
The credit approach that Danny suggests works from a debtors balance perspective but may have implications on your GST/BAS Return. Xero does have a "prepayment" option that accounts for this. Here are two options that should (but I am not an Aussie Accountant so I can't say for sure) solve all problems:
1. Receive the proceeds as a Prepayment type (under Receive Money). Keep issuing your invoices monthly and allocate them against the prepayment until it is all used up.
2. Issue an invoice for the annual fee and match the receipt against it. Now either use Manual Journals to transfer the 11/12ths out to a Prepaid Income account, and each month move 1/12 back. As you can't set up repeating journals you could setup a repeating Sales Invoice (that balances to zero) to achieve the same thing (or an AP Bill - as the debits are positive and credits are negative here so it is more intuitive).
Hope that helps Justin.
1. Receive the proceeds as a Prepayment type (under Receive Money). Keep issuing your invoices monthly and allocate them against the prepayment until it is all used up.
2. Issue an invoice for the annual fee and match the receipt against it. Now either use Manual Journals to transfer the 11/12ths out to a Prepaid Income account, and each month move 1/12 back. As you can't set up repeating journals you could setup a repeating Sales Invoice (that balances to zero) to achieve the same thing (or an AP Bill - as the debits are positive and credits are negative here so it is more intuitive).
Hope that helps Justin.
Hmmm..it's certainly more complicated than it seems. I would say that your approach looks best Peter, I'll see about setting that up.
Thanks for the feedback everyone.
Thanks for the feedback everyone.
Which one? I assume option 1 (which is what I would use now that I know about Prepayment transaction type in Xero!)
Option 1, it seems more intuitive and less need for manual journals
Please note, there is also a request put forward to build something specific for future revenue/revenue recognition but until then, the suggestions above and on the request thread are what we suggest.
But I cannot do pre-payment without putting the line items again in that payment, looks like I am missing something, a payment should have only amount, when paid, and by which customer, why line item details on the bottom with qty, perunit price, account.... am I missing something here. Your help is much appreciated.
WHY IS THERE LINE ITEM DETAILS IN A PAYMENT???
WHY IS THERE LINE ITEM DETAILS IN A PAYMENT???
Rao. I think you have some things confused. There are really 4 types of transactions: Payments (applied to an invoice), Prepayments, Overpayments and Receive Money. Payments apply a bank feed line against Invoices or other bank transactions. You can have a payment applied to multiple transactions, but a payment has no coding in and of itself. W Pre-Payment (and over-payment) uses the Receive Money format, but only requires a single entry - it applies the payment to a single Debtors account but WITHOUT matching against an invoice (i.e., a floating credit). A Pre-payment/Overpayment should use the Accounts Receivable code and not the underlying transaction code (you will need to raise an invoice again at a later date and then apply the pre/over-payment against it).
I hope that this helps. Please review the help system https://help.xero.com/nz/#BankAccounts_Prepayments for more detailed assistance.
I hope that this helps. Please review the help system https://help.xero.com/nz/#BankAccounts_Prepayments for more detailed assistance.
I'm seeing a lot of 'this is what I might do answers' but no definitive best practices.... anyone got those?
Is this the best way to do it?
Problem: I invoice for 9k (present day) for the next 3 months. I want to recognize the 9k over upcoming 3 months (excluding tax).
Create a sale. Add description for 9k item. Invoice it. Account = Deferred Revenue on Liabilities side.
Entry should be:
Debit -- A/R 9k
Credit -- Deferred Revenue 9k
At the EOM, I manually create a JOURNAL for:
Debit -- Deferred Revenue 3k
Credit -- Revenue 3k
Manage all my accruals in an ugly spreadsheet till its automated.
Is that correct?
Problem: I invoice for 9k (present day) for the next 3 months. I want to recognize the 9k over upcoming 3 months (excluding tax).
Create a sale. Add description for 9k item. Invoice it. Account = Deferred Revenue on Liabilities side.
Entry should be:
Debit -- A/R 9k
Credit -- Deferred Revenue 9k
At the EOM, I manually create a JOURNAL for:
Debit -- Deferred Revenue 3k
Credit -- Revenue 3k
Manage all my accruals in an ugly spreadsheet till its automated.
Is that correct?
Can any Partners here help out Latif??
Latif, the problem is that most of the knowledgeable contributors on this site are professional accountants and we know the reality that we don't know all the information necessary and so are only giving general advice. There is no one formally accumulating this kind of information and obtaining academic thought on these issues. What meets your objectives may not meed my objectives. It would be presumptive for us to call our own advice "definitive best practice". But if you spend any time on this forum you will soon work out who knows their stuff (people like Heather Smith - author of Xero for Dummies, Gayle Buchanan, Jeri Murphy, among several, and, if I can toot my own horn - me, Xero Most Valuable Professional for 2012 NZ).
So here is what I would call "best practice" in your situation:
1. record the sale in an invoice as you normally would, but with all 3 months going to an Income in Advance (current liability) account (e.g., $9000+tax to 450 Income in Advance) - make sure that sales tax is correctly charged on the invoice, the fact that it is not going to a revenue account will not show up on the invoice
2. create a Repeating Bill on the same date as the invoice - use the same contact name but the Bill amount is 0, and there is NO TAX; make sure that you put an end date! The bill coding lines will be
$3000 450 Income in Advance
$3000 200 Sales
This will have the effect of creating a repeating journal to amortize the balance. A spreadsheet is not necessary to manage it, but may be needed at the end of the year to balance the Income in Advance Account. The monthly repeating bills will not show of the client's statement (as they are AP Bills, not AR Invoices) and will automatically be marked as paid because they are of zero value. This method has the advantage that it is "set and forget" - there is nothing to do once setup.
The only down side here is that the initial sale will be listed in the Cash Summary and Sales Tax Reports under the Income in Advance line not the Sales line. There is a way to get round that, but it is more complex and therefore I would not consider it "best practice".
So here is what I would call "best practice" in your situation:
1. record the sale in an invoice as you normally would, but with all 3 months going to an Income in Advance (current liability) account (e.g., $9000+tax to 450 Income in Advance) - make sure that sales tax is correctly charged on the invoice, the fact that it is not going to a revenue account will not show up on the invoice
2. create a Repeating Bill on the same date as the invoice - use the same contact name but the Bill amount is 0, and there is NO TAX; make sure that you put an end date! The bill coding lines will be
$3000 450 Income in Advance
$3000 200 Sales
This will have the effect of creating a repeating journal to amortize the balance. A spreadsheet is not necessary to manage it, but may be needed at the end of the year to balance the Income in Advance Account. The monthly repeating bills will not show of the client's statement (as they are AP Bills, not AR Invoices) and will automatically be marked as paid because they are of zero value. This method has the advantage that it is "set and forget" - there is nothing to do once setup.
The only down side here is that the initial sale will be listed in the Cash Summary and Sales Tax Reports under the Income in Advance line not the Sales line. There is a way to get round that, but it is more complex and therefore I would not consider it "best practice".
Peter! I did not see this response, so my apologies. A very big thank you for taking the time for write all that out.
I now see how this process will 'not require' a spreadsheet.
What about if I have 20 people signing up for my service a day and paying for the quarter (or maybe year? Is the idea that every time I close a customer, I go in and create a repeating manually? OR should I looking at API customization.....
-Latif
I now see how this process will 'not require' a spreadsheet.
What about if I have 20 people signing up for my service a day and paying for the quarter (or maybe year? Is the idea that every time I close a customer, I go in and create a repeating manually? OR should I looking at API customization.....
-Latif
Hi Latif. If you have 20 transactions a day then you may need a different approach. Xero (and most accounting systems) do not offer an automatic solution to this. I don't know of any API partners that provide this either (but there might be). If you want a custom tool to do this then it is definitely possible. You really are asking accounting questions now and should seek professional advice. Why not talk to your accountant or Xero Certified Advisor. If you code your transactions appropriately you could do a Manual Journal to amortise the revenue in bulk at the end of each month.
If you would like to consult on a better solution I am happy to do that - I offer this as a paid service.
Peter.
I'm an NZ Chartered Accountant, Xero Certified Advisor and Xero's 2012 Most Valuable Professional. Please contact me for qualified accounting and business support: www.business-express.co.nz or phone +64-4-282-0306 or +1-647-367-0876.
If you would like to consult on a better solution I am happy to do that - I offer this as a paid service.
Peter.
I'm an NZ Chartered Accountant, Xero Certified Advisor and Xero's 2012 Most Valuable Professional. Please contact me for qualified accounting and business support: www.business-express.co.nz or phone +64-4-282-0306 or +1-647-367-0876.
Peter! I finally got to actually implementing this. My only question is
2. create a Repeating Bill on the same date as the invoice - use the same contact name (OKAY)
"but the Bill amount is 0"(WHY and how can it be "0" if the coding lines are? Is the quantity 0x3000 or 1x3000?)
$3000 450 Income in Advance
$3000 200 Sales
2. create a Repeating Bill on the same date as the invoice - use the same contact name (OKAY)
"but the Bill amount is 0"(WHY and how can it be "0" if the coding lines are? Is the quantity 0x3000 or 1x3000?)
$3000 450 Income in Advance
$3000 200 Sales
Hi Latif,
Sorry for not being clearer. The TOTAL of the Bill should be 0. You will want the coding lines like this:
1 x 3000 450 Income in Advance = 3000
1 x -3000 200 Sales = -3000
Total = 0 (no tax on any).
The effect of this will be the same as a Manual Journal that amortises the Income in Advance back into Sales on a pre-set frequency.
Peter.
I offer live remote Xero support. I am a Xero Certified Advisor and Xero's award winning Most Valuable Professional. I support small businesses in NZ with professional accounting services and offer paid Xero support and implementation advice to clients all over the globe. Get a Xero MVP on your team! I'm an NZ and Canadian Chartered Accountant, business advisor and add-on Developer.
Visit my blog for various Xero articles.
Sorry for not being clearer. The TOTAL of the Bill should be 0. You will want the coding lines like this:
1 x 3000 450 Income in Advance = 3000
1 x -3000 200 Sales = -3000
Total = 0 (no tax on any).
The effect of this will be the same as a Manual Journal that amortises the Income in Advance back into Sales on a pre-set frequency.
Peter.
I offer live remote Xero support. I am a Xero Certified Advisor and Xero's award winning Most Valuable Professional. I support small businesses in NZ with professional accounting services and offer paid Xero support and implementation advice to clients all over the globe. Get a Xero MVP on your team! I'm an NZ and Canadian Chartered Accountant, business advisor and add-on Developer.
Visit my blog for various Xero articles.
Now that Xero has repeating manual journals, the easiest method is to invoice for the full amount and select your deferred revenue liability account. Then set up a recurring manual journal to debit the deferred revenue account and credit your revenue account for 1/12 of the total each month. Here's the link to the Xero article on Repeating Manual Journals: http://help.xero.com/nz/ManualJournalsRepeating
Thanks Blake! One of the (many) reasons why repeating journals were developed.
XERO, you already have this built!!!! just take the fixed assets module and call it amortization or something like that. Allow us to select the accounts that are monitored. This would allow automatic recognition of prepaid expenses, deferred rev if we have some tweaks to the methods to recognize it. Just give it to us!!!
It was very interesting to read this thread from the beginning. I'm very glad to see Blake's response in February. Exactly what we needed! Thank you
If you have more than a handful of transactions to handle, check out Flowrev
flowrev.com/Xero
a new, Xero certified, add-on for deferred revenue recognition.
Also see:
Future revenue / revenue recognition
flowrev.com/Xero
a new, Xero certified, add-on for deferred revenue recognition.
Also see:
Future revenue / revenue recognition
Hi everyone,
After reading through the thread there is still one question unanswered.
When setting up the inventory for the sale of an item, I choose the sales account as the unearned revenue liability but which Tax rate account do I choose?
- GST on expenses
- GST on income
Im assuming its income but just double checking.
Thanks,
Nadean
After reading through the thread there is still one question unanswered.
When setting up the inventory for the sale of an item, I choose the sales account as the unearned revenue liability but which Tax rate account do I choose?
- GST on expenses
- GST on income
Im assuming its income but just double checking.
Thanks,
Nadean
Nadean, it would be GST on income if you are recording the sale.
FYI: Flowrev successfully completed its beta in December 2015.
It's a Xero certified deferred revenue / revenue recognition add-on that works seamlessly with inventory items (and also for invoice lines created without a corresponding inventory item) mapped to either revenue or unearned revenue accounts.
Happy to help anyone interested with a free trial:
flowrev.com/register
Best regards,
Kamal.
--
Kamal Varma
Founder
Flowrev
It's a Xero certified deferred revenue / revenue recognition add-on that works seamlessly with inventory items (and also for invoice lines created without a corresponding inventory item) mapped to either revenue or unearned revenue accounts.
Happy to help anyone interested with a free trial:
flowrev.com/register
Best regards,
Kamal.
--
Kamal Varma
Founder
Flowrev
Hi Kamal, thanks, just checking out your product. Looks very useful for us.
Hi Bruce,
Delighted to hear that.
You can get started by signing up for a free 30-day trial at flowrev.com/register
And drop us a note (contact@flowrev.com) anytime you have questions / need help. Alternately, use the "Help" page in the app after signup to search documentation or to connect.
Best regards,
Kamal.
Delighted to hear that.
You can get started by signing up for a free 30-day trial at flowrev.com/register
And drop us a note (contact@flowrev.com) anytime you have questions / need help. Alternately, use the "Help" page in the app after signup to search documentation or to connect.
Best regards,
Kamal.
Hi Bruce, just checking in with you - let me know if you have questions. Regards, Kamal.
Hi All, It seems that I am not able to start my own thread so instead I will post here. We are a SAAS business and receive subscription revenue based on annual subscriptions. As we have so many subscriptions we have decided that it is best at the year end to calculate what revenue should be deferred into the next year. However the problem is that deferring the revenue is also affecting my cash summary.
Financial year end is the 31st December, so lets say I want to defer $3,000.
On the 31st December I did the following.
Debit Sales Revenue - $3,000
Credit Deferred Revenue - $3,000
On the 1st January
Credit Sales Revenue - $3,000
Debit Deferred Revenue - $3,000
However the problem is my cash income for the period to the 31st December has now gone down by $3,000 even though I have received the cash and still want the cash to be recognised and just the revenue recognised in the next period. Should I be setting up a control account or something to defer the revenue so that cash is not affected?
Many thanks for your help. Jo
Financial year end is the 31st December, so lets say I want to defer $3,000.
On the 31st December I did the following.
Debit Sales Revenue - $3,000
Credit Deferred Revenue - $3,000
On the 1st January
Credit Sales Revenue - $3,000
Debit Deferred Revenue - $3,000
However the problem is my cash income for the period to the 31st December has now gone down by $3,000 even though I have received the cash and still want the cash to be recognised and just the revenue recognised in the next period. Should I be setting up a control account or something to defer the revenue so that cash is not affected?
Many thanks for your help. Jo
Also I should just add to this that we do not raise invoices. We reconcile the money received in the bank straight to the Sales Revenue account. Thanks in advance. Jo
Hello Jo,
Is the "show journal on cash basis report" check box checked in the manual journal you entered to do the deferral on Dec 31? If yes, that would be one reason your cash basis/summary report would be impacted.
The deferral (and subsequent recognition in Jan) should be on an accrual only basis transaction, which you achieve by clearing that check box. Something to cross check.
Best regards,
Kamal
Is the "show journal on cash basis report" check box checked in the manual journal you entered to do the deferral on Dec 31? If yes, that would be one reason your cash basis/summary report would be impacted.
The deferral (and subsequent recognition in Jan) should be on an accrual only basis transaction, which you achieve by clearing that check box. Something to cross check.
Best regards,
Kamal
Karmal,
It was so simple but it was driving me mad. Thank you so much for your help.
Best,
Jo
It was so simple but it was driving me mad. Thank you so much for your help.
Best,
Jo
You're welcome Jo. Glad that was easy to address.
Any particular reason you're recognizing the full amount on Jan 1?
As a SaaS business, you may need to recognize the 3000 over time as you deliver the 'services' vs. all on Jan 1 - unless you're delivering all the service on that date (for some revrec scenarios, see: http://xumagazine.com/issue-06/dont-you-just-divide-by-12 )
Best regards,
Kamal.
Any particular reason you're recognizing the full amount on Jan 1?
As a SaaS business, you may need to recognize the 3000 over time as you deliver the 'services' vs. all on Jan 1 - unless you're delivering all the service on that date (for some revrec scenarios, see: http://xumagazine.com/issue-06/dont-you-just-divide-by-12 )
Best regards,
Kamal.
Hi,
Need advise here, scenario is like this.
Customer wanted to pay in advance for a 12 month Subcription which started on Nov 1 2016 and will End on Oct 31,2017. Since the customer paid us in advance how do we account the revenue? Should this be partly realized for 2016 or fully realized in 2017?
Also, for this Subscription, we incurr cost for some licenses and we want to assign the cost incurred to this customer and realize the same on monthly basis until the subcription ends which is Oct 31,2017. How do we account such expenses related to a revenue?
Appreciate your inputs!
Thanks
Need advise here, scenario is like this.
Customer wanted to pay in advance for a 12 month Subcription which started on Nov 1 2016 and will End on Oct 31,2017. Since the customer paid us in advance how do we account the revenue? Should this be partly realized for 2016 or fully realized in 2017?
Also, for this Subscription, we incurr cost for some licenses and we want to assign the cost incurred to this customer and realize the same on monthly basis until the subcription ends which is Oct 31,2017. How do we account such expenses related to a revenue?
Appreciate your inputs!
Thanks
Poornima,
Best to ask your accountant these questions as it relates to accrual accounting concepts. You could book all revenue to a prepaid income account and then use a repeating journal to amortize it. Same for the licenses. Or, at the end of the year you could just journal the unspent/earned portion using a reversing journal.
Peter.
Xero-award winning Most Valuable Professional accountant serving NZ, Canada and US. Book a paid live remote Xero support session with me (no matter where you are) or use our self-paced Xero training.
Best to ask your accountant these questions as it relates to accrual accounting concepts. You could book all revenue to a prepaid income account and then use a repeating journal to amortize it. Same for the licenses. Or, at the end of the year you could just journal the unspent/earned portion using a reversing journal.
Peter.
Xero-award winning Most Valuable Professional accountant serving NZ, Canada and US. Book a paid live remote Xero support session with me (no matter where you are) or use our self-paced Xero training.
Nima,
I would be happy to help quickly in a phone call or email. Aaron.berson@eisneramper.com
I would be happy to help quickly in a phone call or email. Aaron.berson@eisneramper.com
Hi Poornima,
You can also consider using Flowrev too - we're a Xero certified add-on for automating revenue and cost recognition. Many accountants use Flowrev with their clients. And numerous company finance managers, controllers, in-house accountants etc. use it to automate their processes too.
If interested, sign up for a free 14-day trial at: flowrev.com/register and drop me a note with any questions (contact@flowrev.com). We'll be happy to help you with your set up.
Best regards,
Kamal.
You can also consider using Flowrev too - we're a Xero certified add-on for automating revenue and cost recognition. Many accountants use Flowrev with their clients. And numerous company finance managers, controllers, in-house accountants etc. use it to automate their processes too.
If interested, sign up for a free 14-day trial at: flowrev.com/register and drop me a note with any questions (contact@flowrev.com). We'll be happy to help you with your set up.
Best regards,
Kamal.
Thank you Peter!
Thank you Aaron for extending your help!
Thanks Kamal, I will check Flowrev.com
Thank you Aaron for extending your help!
Thanks Kamal, I will check Flowrev.com
Same problem here. We are SAAS and most of our customers pay us for 12 months of service at the start.
How I am doing it now is to create 12 invoices for the next 12 months and when customers pay us upfront, I mark them as paid together under batch deposit.
Eg. Customer service is from July 2017 till June 2018
Create 12 invoices
1) July 2017
2) August 2017
3) September 2017
.
.
.
12) June 2018
And when customer pay on July 2017, I will batch deposit 1-12 together.
Wondering whether this is a good method and if there are any implications using this manner
How I am doing it now is to create 12 invoices for the next 12 months and when customers pay us upfront, I mark them as paid together under batch deposit.
Eg. Customer service is from July 2017 till June 2018
Create 12 invoices
1) July 2017
2) August 2017
3) September 2017
.
.
.
12) June 2018
And when customer pay on July 2017, I will batch deposit 1-12 together.
Wondering whether this is a good method and if there are any implications using this manner
Jay, this seems like a good way of correctly accounting for it within Xero as it stands today. I'll be interested in other people's points of view.
Merged: Deferred income & revenue recognition
Hi,
I want to be able to enter an invoice into Xero that covers a period of time. One of our clients sells subscription packages that last for years but currently there is no way to enter this as an invoice and needs lengthy and sometimes clumsy journals to post correctly.
There should be a feature that allows sales invoices to be entered with a "from" and "to" date and the ability to select how the revenue should be recognised e.g. weekly, monthly, quarterly etc.
This should be able to calculate the deferred income portions of the invoice and then automatically post it from deferred income to sales based on the options selected when entering the invoice.
I have read previous feature requests that refer to a paid app that can handle this but this seems to me like a pretty important feature and one that lots of businesses would make use of.
Thanks
Hi,
I want to be able to enter an invoice into Xero that covers a period of time. One of our clients sells subscription packages that last for years but currently there is no way to enter this as an invoice and needs lengthy and sometimes clumsy journals to post correctly.
There should be a feature that allows sales invoices to be entered with a "from" and "to" date and the ability to select how the revenue should be recognised e.g. weekly, monthly, quarterly etc.
This should be able to calculate the deferred income portions of the invoice and then automatically post it from deferred income to sales based on the options selected when entering the invoice.
I have read previous feature requests that refer to a paid app that can handle this but this seems to me like a pretty important feature and one that lots of businesses would make use of.
Thanks
James, you can use Repeating Invoices for this, or a Repeating Manual Journal. There's not a specific way to do this in Xero at the moment, but I'm going to merge your discussion here so you can take a look at the previous conversation about this.
Apologies if this has been covered before but has anyone used flowrev, an app which appears to provide a solution...
Hi Jonathan,
Thanks for your interest. I will be happy to connect you to some of our current users. Please contact us directly: contact@flowrev.com
Some reviews are available on the Xero app review site here.
Kamal.
Thanks for your interest. I will be happy to connect you to some of our current users. Please contact us directly: contact@flowrev.com
Some reviews are available on the Xero app review site here.
Kamal.