Adding deferral code on subscription lines

The subscription app for Microsoft Dynamics 365 Business Central lets you defer subscription income automatically using the standard deferral function. You add a deferral code on the subscription line, and the code follows through to the invoice line when you create the subscription invoice.

You can set up different invoice intervals on a single subscription. The same subscription can hold lines billed monthly, quarterly, and yearly at the same time.

You decide per line whether income should be deferred. A monthly line that you already post every month does not need a deferral, while a quarterly or yearly line can be deferred so the income is recognised evenly across each month even though you only invoice it once a quarter or once a year.

Before you post, you can use Preview Posting to confirm that everything posts the way you expect.

Automatic income deferral in the subscription app

One of the areas where the subscription app adds real value is the option to defer your income automatically. Instead of building manual deferral schedules, you use the standard deferral function built into Business Central and let it handle the periodisation for you.

The point of deferring is to recognise income in the period it belongs to, rather than all at once when you invoice. If you invoice a customer for a full quarter up front, you can still post one third of that income each month using a deferral code.

Mixing monthly, quarterly, and yearly invoice intervals on one subscription

A subscription can contain lines with different invoice intervals. In this example, the subscription has three lines:

• One line booked monthly, with an invoice frequency of one month
• One line booked quarterly, with an invoice frequency of every three months
• One line booked yearly, with an invoice frequency of once a year

You will not always mix all three intervals on the same subscription. More often you have different types of subscriptions, each with their own lines. But it is a realistic case, and the app handles it without any extra work.

Once you fill in the starting date and the invoice frequency on each line, the system calculates the end date for the first period and fills in the next invoice date and the ending date for you.

Choosing which lines to defer with deferral codes

You do not have to defer every line. You decide line by line.

The monthly line does not need a deferral code, because you already post that income every month when you invoice it. There is nothing to spread out.

The quarterly and yearly lines are different. Even though you only invoice the customer quarterly or yearly, you want the income posted every month. That is where the deferral codes come in. In this example there are two codes:

• A deferral code for sale three months, used on the quarterly line
• A deferral code for sale 12 months, used on the yearly line

When you add these codes to the subscription lines, they carry over automatically to the lines of the invoice when you create a subscription invoice. You set them up once and let them flow through.

Creating the subscription invoice with deferral codes

To invoice for a single month, for example January, you change the date on the create subscription invoice report and post it on the same date.

You can choose how the invoice is generated, either per customer subscription or per line. When you open the report from the subscription order, the filter for that customer is already applied.

The system then generates the invoice with the deferral codes already on the lines. You did not have to enter them again on the invoice. They came from the subscription.

Checking the result before you post

Before posting, you can open the deferral on the line to check the schedule. You can also use Preview Posting to confirm that everything will be posted exactly as you expect. That way you catch any surprises before the entries hit your books.

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