Deferred Revenue
Record an upfront payment as a liability and build the recognition schedule against a contract period. This page states exactly what posts to the ledger today and what does not.
Deferred revenue is money received before it has been earned. A customer who pays 12,000 upfront for a year of service has not given you 12,000 of revenue on day one — they have given you cash and a twelve-month obligation. Recognising the whole amount immediately overstates the first period and understates every one after it.
Trabalance lets you configure this on an invoice: it records the upfront cash against a liability account and builds a dated recognition schedule you can read on the document.
The schedule is created and displayed, and the upfront cash entry posts correctly. The future recognition entries do not post to the ledger on their own — they are written as Scheduled and stay Scheduled. There is no job in the platform that promotes them. Until that is corrected, treat this feature as a schedule you read and act on, and post each period's recognition yourself with a journal in Finance. This is a known defect and has been reported; it is documented here rather than described as working.
When it applies
| Scenario | Why defer |
|---|---|
| Annual subscription paid upfront | The service is delivered monthly — a twelfth is earned each month. |
| Maintenance contract paid at the start of the year | Cover is provided across the year, not on the day of payment. |
| Rent received in advance | Occupancy is provided month by month. |
| Multi-year support agreement | Support is delivered continuously over the term. |
| Prepaid professional-services retainer | Hours are consumed over time. |
Where the option lives
Deferred revenue is a pill on the document form — Defer Revenue. It appears only when:
- deferred revenue is switched on for your business in Settings, and
- the document is an Invoice or a Sales receipt.
With the pill active, the form shows a dashed Configure Revenue Recognition button. Once configured, that becomes a card headed Revenue Recognition Configured showing the mode, the contract dates, the number of entries and the total, with a preview of the first three and an Edit link.
Configuring the schedule
Payment Date — when the customer actually paid; defaults to the document date. Received In — the bank or cash account the money landed in. Amount Received — the cash received upfront; defaults to the document total.
The liability account the money sits in until it is earned. The picker offers accounts under Liabilities, and account types whose names carry liability, payable, unearned or deferred.
Choose Auto Schedule or Manual Edit, then set Contract Start Date and Contract End Date. In auto mode, pick a Recognition Frequency — Daily, Weekly, Monthly, Quarterly, Semi-Annually or Annually — and the schedule is generated with one entry per period, each dated the last day of its period, splitting the amount evenly.
Manual Edit gives you a table of Recognition Date and Amount rows with an Add Entry button. A running total shows how much is left to allocate or how far over you are.
The button stays disabled until the deferred account, the payment account, the payment date and both contract dates are set and the amount is above zero.
In Manual Edit, a schedule whose entries do not total the amount received is accepted anyway — the mismatch is only written to the browser console. Check the running total yourself before applying.
What actually posts
Saving an invoice with deferred revenue configured does three things.
1. A receipt document is created for the upfront payment — a real, posted receipt with its own number, linked back to the invoice.
2. The cash entry posts, and it is live in your ledger:
| Account | Debit | Credit | Description |
|---|---|---|---|
| Bank / Cash (the account you chose) | 12,000.00 | — | The money that actually arrived |
| Deferred Revenue | — | 12,000.00 | A liability — you owe the customer service, not cash |
3. Every recognition entry is written ahead of time — and left Scheduled:
| Account | Debit | Credit | Description |
|---|---|---|---|
| Deferred Revenue | 1,000.00 | — | The obligation for this period is discharged |
| Revenue | — | 1,000.00 | The revenue account comes from the invoice's own line items |
The credit is apportioned across the invoice's items using each item's own income account, so a mixed invoice recognises into the right revenue lines rather than a single lump.
When deferred revenue is enabled on an invoice, the ordinary invoice posting — DR Accounts Receivable / CR Sales Revenue — is not made. The cash entry above takes its place. This is correct for a prepaid contract, where no receivable ever exists, but it does mean the document behaves unlike every other invoice: it creates no AR, so it will never appear as unpaid, never age, and never be settled by a receipt. Do not configure deferred revenue on an invoice you intend to bill and collect later.
Reading the schedule on the document
A configured document carries a Deferred Revenue badge in its header and a schedule panel listing every entry with a status.
| Status | Meaning |
|---|---|
| Posted | The recognition entry is live in the ledger and affects the Trial Balance. |
| Scheduled | The entry exists and is dated, but is not in the ledger. It does not affect any report. Today, entries remain in this state. |
The panel also shows amount recognised, amount remaining, and entries recognised of total entries. Because nothing promotes entries today, amount recognised reads zero and every entry reads Scheduled.
What to do in the meantime
It is the record of what should be recognised and when, and it puts the cash in the right liability account on day one.
In Finance, raise a journal for the period: DR Deferred Revenue, CR the revenue account. Use the schedule on the document for the date and the amount.
For an even monthly schedule, a recurring journal in Finance does the same job on a timer and needs no attention until the contract ends.
Related
- Posting the recognition entry yourself: Manual journals and Recurring journals.
- The liability account it credits: Chart of accounts.
- Billing the same contract on a timer instead: Recurring invoices.
- The ordinary invoice posting this replaces: Invoices.