Hello All,
I encountering a requirement from one of my clients, it goes as below,
Client is into leasing business, all lease contracts with customer are handled through Project contracts and individual T&M Projects are created for each asset that is leased out. They have a practice of Invoicing the rent in advance.
For eg: For the Rent that needs to collected for Dec 1-31st, invoice is posted and sent out on Nov 15.They defer the revenue on Dec 1.
1)Solution that I suggested was to create Customized Billing schedule form. This lists down all the Customer Billings over the period of time. Eg: Month Billing line for 12 months in relation to the Project id & Project contract id. This does not have any ledger impact.
2) Next step is to, defer the revenue through accrued revenue option i.e, all the rent that needs to be collected for Dec 1-31st is deferred to Dec 1.
Entry: Deferred revenue 400420 Db
Accrued Revenue 600120 Cr
3) After that I create invoice proposal and post the invoice on Nov 15th.
Entry : Reversal of prev entry
AR Db
Invoiced Revenue 600120 Cr
Due to the above proposed solution, 2 problems were highlighted,
1) If there are any changes in Amounts or cancelling of any specific line during invoice proposal phase. User needs to manually reverse the Deferred revenue posting, then make changes to the amounts/remove the specific line in Billing schedule form, Then again repeat all the steps from scratch. This is a short-coming.
2) There are some issues in exchange rate difference when transaction/billing currency is different from Accounting currency of the LE.
Preferred solution from Customer:
1) Step 1: To post Invoice Nov 15 . Expected entry : AR Db
Deferred revenue Cr
2) Step 2: Defer the revenue to Dec 1 . Expected entry : Deferred revenue Db
Invoiced revenue Cr.
Kindly help me to provide a good solution to the client.Thanks in advance.
