How to set up deferred income

The below explanation covers deferred income however the same principles do apply to prepayments.

On the selected chart of account that you wish to apply deferred you will need to ensure the below indicated boxes are ticked so that the functionality is available for setting as an account default. 

You will also need to tick the deferred setting box on any on any account you wish to apply deferred income to when selecting it on a document

For the below  example, ‘Subscriptions’ will be used.

Next up, navigate to the ‘Account Defaults' screen, and under the ‘Period End’ heading, click into into the 'Deferred Income’ purpose. 

One the screen that opens select the balance sheet deferred account that will retain the balance of the deferred income to be moved at the required times. 

It is possible to set up multiple deferred income accounts using the additional criteria of product, product group and account.

After doing the above it would be advised to check whether the following components are already set up and available as the deferred income will not work correctly otherwise.

Moving on, we want to now navigate to ‘Document types’, and ensure the Deferred Income document type is unlocked. 

This can be done by clicking the green dot net to the filter button to reveal the locked options. Then locate the locked document, highlight it and click the 3 dots followed by unlock.

If the document is locked, you may also need a document series to be added. This can be checked by clicking into the document to view the settings and then check the series tab.
If one is not available either select from the existing options or create a custom series to assign a document reference.

Remaining on the ‘Document types’ screen, you will need to click into which doc types you will intend Deferred income to be enabled on, and tick the Deferred setting box found on the ‘Sale’ tab.  

Below shows Sale Order: Standard document type, but you will need to enable this for all other Sales documents used  if you wish for them to also allow Deferred Income.  

Next, you will need to check whether there is an existing automation for deferred income by going to the ‘Automations’ screen and checking the list. 

If deferred income is not visible you will need to create a new automation, with the fields populated as per the below screenshot.

In the ‘From doc type’ field be sure to select all necessary sale invoice document types deferred will be used on.

Finally, check that the deferred income scheduler is set up to run so that the journals set to be created in the months following the invoice being posted are picked up.

You should just need to enter the "setup parameter" with the below entry.

For the execution pattern, you may want to consider having the scheduler every day so that journals set for different dates of the month are captured and created on the scheduled days.

The scheduler will fail if journals are scheduled to be created for a locked period. This is particularly common when it is the first of the month and the new period is not yet unlocked ahead of the commencement of that month.

Below is a screenshot of a new Sale Invoice using the deferred option that has been set against a P&L account nominal code.

Since this account is enabled for Deferred Income, it has a ‘distribution profile’ available under the line columns. 

This is where you select the time scale you with for the income to be spread over, including a start and end date.

It is possible to set up custom deferred profiles if the current ones available do not meet your requirements. 

Once the document has been submitted, a tab called Deferred will be available that shows the selected distribution profile schedule, which includes the breakdown of due, and fulfilled payments up this this point. 

The detail option on this tab will also show documents created against each scheduled period.

You can also click the links button at the top of the screen to see any linked documents. This function is available across all documents which may have linked documents such as Interco movements.

When looking at a linked journal you will see the scheduled amount is moved from the deferred income account into the selected nominal P&L account. This shows that the deferred has worked as intended.