Dynamics Community Forum Thread Details

Subscription & Recurring Billing – Credit Memo Reverses All Deferrals on Credit Memo Date

Scenario

In the Subscription & Recurring Billing module I post sales invoices from a contract.

Deferrals are created by the system and they correctly distribute the revenue across the related months.

Problem

When a credit memo is posted from the same contract, the automatic deferral logic creates an accounting issue.

Example (key case):

Key Case 1 – Full Contract Cancellation After One Month

Contract term: 3 months (Sep–Nov)
One month (September) has already been recognized and released to the revenue account.
The contract and invoice are later found to be completely incorrect.
Using a credit memo from the contract reverses all deferrals in October, including the September portion that was already recognized.

Result: the September revenue account remains overstated because the reversal hits October instead of the original recognition month.

It seems that the built-in contract credit function can only be used safely before any deferral is released.

Key Case 2 – Partial Refund for Remaining Months

Contract term: 3 months (Sep–Nov)
After one full month of service (September), we need to refund only the next two months (October and November).

Question: How should this be processed?

A standard contract credit memo reverses all three months on the credit memo date, not just the two remaining deferrals that have not yet been released.
It is unclear how to credit only the future deferrals while leaving the recognized September revenue untouched.

Questions for the Community

Is this considered the intended standard behavior for Subscription & Recurring Billing credit memos?
Has anyone found a practical way to handle it?

PS I know that in documentation there is stated that the credit memo of a sales invoice from contract reverse all the deferrals at the posting date of credit memo but how to solve above problems?

Thanks for any insights or shared experience.

Categories:

Dynamics 365 Business Central

Microsoft Dynamics NAV

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