How to defer revenue recognition from periodic Service Contract invoice

(0) Share

Report

Posted on by Community Member

I'm using Service Contract to get periodic service contract invoices to the customer.

If the invoicing period is Month, then monthly invoices can be generated - no issue.

If the invoicing period is Quarterly, the invoice generated covers 3 months. This is fine, except now I need to recognize the revenue monthly (i.e. deferring the revenue).

Example, quarterly service contract invoice = $300 for the quarter Oct-2021 to Dec-2021

I need to recognize revenue of $100 per month over the 3 months.

The Deferral Template is not available for Service Contract and Service Contract Invoice lines.

Has anyone worked out a way to handle the deferral for Service Contract invoicing?

Thanks

I have the same question (0)

All responses (4)

Answers (1)

Verified answer

S.Kawamura 1,530 on at

Like (0)

Report

Hi,

Executing "Posted Prepaid Service Contract Entries" will allow you to defer service revenue.
"Post until Date" is used to pick up Service Ledger Entries for defer service revenue.

When you run this report, the prepaid account will be transferred and posted to the service revenue account.
Prepaid account and service revenue account are defined on Service Contract as below.

As a prerequisite, prepaid field on Service Contract should be ON.

Column "Prepaid" on Service Ledger Entries tell you each entries are prepaid related or not.
Column "Moved from Prepaid Acc." on Service Ledger Entries tell you each entries have been transferred or not yet.

I hope this helps you.

S.Kawamura

Was this reply helpful? Yes No
Suggested answer

Community Member on at

Like (0)

Report

Hi Kawamura

Thank you for your thorough answer. I'm new to Service Management module and thought that the Prepay flag is similar to the Prepayment in Finance module. But this Prepay flag is actually for deferred recognition of the contract invoiced amount.

I tested the scenario as you mentioned and it's good.

The only exception is the "Moved from Prepaid Acc" flag in the Service Ledger Entries. When I created the Service Contract Invoice, the flag was unchecked for all the entries in the quarter. Once I posted the Service Contract Invoice, the flag was checked even before I ran the Post Prepaid Service Contract Entries report. I ran the report and the entries for each period are then posted in G/L and can be viewed in General Ledger Entries.

Now I've to figure out how to combine the invoice lines for multiple periods for the quarterly invoice. The invoice shows multiple of lines - one for each period instead of one line showing the full quarter.

Was this reply helpful? Yes No
Suggested answer

S.Kawamura 1,530 on at

Like (0)

Report

Hi,

So far as I know, out-of-box feature for combine multiple period into one service invoice line. 4 years ago, my project made a customizing program for the same requirement.

Thanks,

S.Kawamura

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report

Hello - I am also trying to get Service Contract Deferral to work. Where do you put the Deferral Template to define that you want (as in example above) deferral of $100 per month over the three months?

Was this reply helpful? Yes No