Schedule Meeting

How to Create Deferred Revenue Management in Odoo v12

Deferred Revenue Management in Odoo v12

Deferred revenue refers to payments received in advance for services which have not yet been performed or goods which have not yet been delivered. These revenues are classified on the company’s balance sheet as a liability and not as an asset. Deferred revenue is common among software and insurance providers, who require up-front payments in exchange for service periods that may last for many months.

Example of Deferred Revenue:

To illustrate deferred revenue, let’s assume that a company designs websites and has been asked to provide a price quote for a new website. The design company states that it can complete the new website for $70,000. The terms require a payment of $30,000 at the time the contract is signed and $40,000 at the end of the project, which is estimated to take 60 days. The company agrees to begin working on the project 10 days after the $30,000 is received.

Configuration:

Firstly, you have to install the Accounting module in your database. In order to configure deferred revenues, Go to Accounting -> Configuration -> Settings -> Automated Entries, and tick the option Deferred Revenues management.

Firstly you have to define deferred revenues type before registering your first deferred revenue. Now go to Configuration -> Deferred Revenue Types at that time you have to create a new deferred revenue type by click on the “Create” button.

Example of deferred revenues type: 12 months or 1-year service contract.

 

 

In this type of Deferred Revenue,  you have to fill following details like  Journal, Deferred Revenue Account, Recognition Income Account, Recognition Account, Company, Number of entries as 12 or one years and One Entry Every as 1 month. 
  
Fill in the following detail like Code, Name, Type, Company, etc. Deferred Revenue account type is a current liability account, it contains revenue that has been earned.

Now Lets’ See how to create a Deferred Revenue Manually

If you want to manually create a deferred revenue, Now Go to the  Accounting -> Management -> Deferred Revenues.

 

In this type of deferred revenue, fill the following details like category selected as Service:1 year, Currency selected as INR and set Gross Value as Rs 48,000 and click on Save button. You can views that residual value is automatically set as same as of the gross value.
Under the Revenue Information tab, you have to define two types of Time Method like Number of Entries, Ending Date.
    1. Number of Entries: The field to input the number of deferred revenue line required to get displayed.

 

 2. Ending Date: This type of Time method is displays the end date field. Provides the date you need – which deferred revenue should end in that field.

 

When you select the Time Method as Number of Entries and you can also click on the Compute Revenue button to check the revenue board before confirming the revenue. 

Now you can views the deferred revenue becoming 4,000 each month. Over the 12 months, you can also view that 4,000 rupees getting reduce from the deferred revenue account and recognizing that amount as revenue. Whenever you want to control the revenue board: by clicking on the red bullet it changes to orange bullet denoting that journal entry has been created for this line.

 

When you click on the orange bullet, then you can also post journal entries before the expected date.

 

Now Lets’ See How to Create Deferred Revenue Automatically from Customer Invoice:

Deferred Revenue can be automatically created from the customer invoice. At that time you need to do is to set a deferred revenue type on your customer invoice line. Whereas the user will validate the invoice, deferred revenue will automatically be created, using the information of the customer invoice.

 

When the customer invoice is validated, Odoo will automatically create a deferred revenue and related journal entry.

 

If you are looking for Odoo implementation for your manufacturing business  contact us here   Feel free to connect with us on info@planet-odoo.com

 

 

 

Write your comment Here