Deferred revenue

Basic accounting principles dictate that income is only recognised when earned, and expenses when incurred. This concept employs "deferral" in accounting, which delays recording certain revenues or expenses on the income statement. Instead, they are initially recorded on the balance sheet (liability or asset) until they are earned or used. In subsequent periods, these amounts are gradually transferred from the balance sheet to the income statement.

In Visma Net, you can manage the processes of recognising the revenues until you deliver goods and services, and deferring expenses over the defined number of periods until they are used up.

By using deferral codes, you can set up various scenarios of revenue and expense recognition.
The system generates appropriate recognition transactions for each document line (such as invoice in the customer ledger invoice detail lines) that require deferrals according to the settings of the specified deferral codes. When the recognition process is run, the system releases and posts recognition transactions that come due, so a portion of the revenue or expenses is recognised.

In the Deferred revenue workspace of Visma Net, you can manage the deferred revenue and expense recognition process.
You can set up the recognition of deferrals in future financial periods as well as in previous financial periods (those that are earlier than the period of the date of the related document) by configuring deferral codes with the appropriate settings.

If a line item in a document is a package (that is, a stock item or non-stock item that includes multiple components), different deferral codes can be assigned to its components as separate units of accounting to set up more accurate revenue recognition procedures.

If a document was released before the decision about deferral had been made, you can manually create custom deferral schedules for its lines and link them to the document.

Other primary functionalities of the workspace include the following:

  • The ability to process schedules in bulk by assigning them to automation schedules
  • The ability to process credit notes associated with deferred invoices
  • Reports that help you to correctly forecast revenues and expenses

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