How to Manage Revenue and Expense Deferrals on Dynamics 365 Business Central

Dynamics 365 Business Central – How to Manage Revenue and Expense Deferrals

Hello and welcome to TMC’s quick tips demo series for Dynamics 365 Business Central where we explore the features of business central for basic tasks within your organization. If you need help with a specific quick tip let us know in the comments below, we’ll try to make it happen. Today we’re going to be going over how to work with deferrals. In this video, you’ll find out how your Business Central system can be used to help automate this process. My name is John Hoyt, Solutions Specialist for Technology Management Concepts, let’s get started.

In this video we’ll cover:

how to work with revenue and expense deferrals
how to create deferral templates
how to make changes to a deferral when needed

Let’s see how this works. I’ll bring up my Business Central system and we use deferral so that we can properly handle a transaction where we might receive the benefit, or we might owe the liability over time. And I want to recognize that timing correctly, and I want to do that in a way that I only have to touch the transaction one time—and one time only. So, I’m going to defer the recognition of the expense, or defer the recognition of that revenue. To do that, I’m going to need to first create a deferral template, and I’ll search for that right now. So, from the search function, I can pull up my deferral templates. Within those deferral templates, I’ve got a couple built we’ll take a look at this insurance one. An insurance policy when you receive it, it typically has a life of six months or 12 months or something. So, I’ve built a deferral template to allow me to recognize that expense over the 12 months. I’m going to recognize 100% of the vendor’s invoice. I’m going to do it in a straight-line calculation, and I want it to begin at the beginning of the next full period. Those options of course can be changed if you need to set up your template in a different fashion. Now, with that template created, I’ve also associated that template with a specific item that I’ve set up as a service item so that I can transact with my vendor using that particular service item.

With that set up, now when I receive a new invoice from my vendor, a new insurance policy is beginning perhaps I can simply create a new transaction. I’ll enter in the details for the vendor, document date, the invoice number, etc. Then when it comes to the body of the document, I want to leave my type as item, and I want to use my specific Z-Insurance service item. I do that because I can associate the template for my deferral with that item so that when I process a transaction for the item, it will automatically include the deferral entries for me. I can show you that by navigating here to the line level and then the related information I can look at the deferral schedule.

So, based upon that deferral template that we created, I know: the posting dates to use, the dollar amounts per period to recognize, and the accounts that are going to be involved. I don’t need to make any changes, but I can if I need to on a case-by-case basis change the method or the periods or the amount. If you’ve made those changes, then recalculate your schedule when everything’s set the way you want. I can close this return back to my document. If I preview my posting now, you’ll see that it has incorporated all of the future journal entries necessary to reclass that from the balance sheet to the expense. So, the ends announced each period on done for me automatically. It will even allow posting into future periods, but the periods do need to be set up in your fiscal calendar.

And that’s how I can use a deferral template to aid in the recognition of expense. I can use the exact same process and create a deferred revenue item and associate that (maybe for a subscription or an annual maintenance charge something like that). So in this video we covered how to work with both revenue and expense deferrals, how to create and maintain our deferral templates, and how to make changes to a deferral based on those templates on a case-by-case basis where needed.

That wraps up this video! If you have any questions would like to make a suggestion on what we should cover in the next video, please comment down below. I’ll do my best to answer your comments. And if you need immediate technical support, I invite you to visit our website abouttmc.com. Also, don’t forget to like this video, subscribe to our channel, and follow our social media accounts in the description below. Thank you for watching!