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Enabling Revenue Bookings With Yearly Revenue Recognition

← Bookkeeping Data Creation Use Cases

This article describes how to configure the bookkeeping data generation for invoices if your accounting requires revenue recognition on a yearly basis.

JustOn Billing & Invoice Management controls the booking data creation using dedicated configurations on invoice line items, G/L account settings, collective account settings and global settings. The key setting to cover the current use case is the Calendar Year revenue recognition rule on the invoice line item, which allocates revenue bookings to the calendar year of the service date or service period of the invoice line item.

Assuming that there is only one applicable tax rate, the following settings are required:

Object Field Value
Global Settings Create Bookkeeping Data true
Assignment Rules - G/L Account G/L Account 8400
Tax Code DE_19
Business Entity business entity name
Collective Account Booking Account 1776
Tax Code DE_19
Type Tax
Collective Account Booking Account 0990
Type Deferred
Invoice Line Item Revenue Recognition Rule Calendar Year

Use Case Outline

An invoice where the service period spans two calendar years may look like this:

Title Service Period Start Service Period End Tax Rate Net Total
Service 2024-04-01 2025-03-31 19% 1200,00
Total (net) 1200,00
VAT 228,00
Grand Total 1428,00

Conditions

Assume the service is paid for a year in advance, but the revenue is booked proportionally per per calendar year. To illustrate this approach, let us therefore assume the following conditions:

  • Service period: one year
  • Full payment at the beginning of the service period
  • Separate bookings for the net revenue and the VAT
  • Deferred revenue on a yearly basis
  • Tax origin and due at the service period start

Booking Accounts

The bookings are expected to be made to the following accounts:

Account name Account no.
SKR 03		 Configuration Type Booking Detail Target Field
Revenue 19% VAT 8400 G/L Account Booking Account
VAT 19% 1776 Collective Account Booking Account
Deferred revenue 0990 Collective Account Booking Account
Debtor 12345 Debtor number Contra Booking Account

Expected Postings

In the first month of the service period (04/2024), the complete amount (1428,00) is initially distributed from the debtor account to:

  • Revenue 19% VAT → 900,00
  • VAT 19% → 228,00
  • Deferred revenue ("Passive Rechnungsabgrenzung") → 300,00
Posting Debit to account Credit to account Amount
1 Debtor (12345) Revenue 19% VAT (8400) 900,00
2 Debtor (12345) VAT 19% (1776) 228,00
3 Debtor (12345) Deferred revenue (0990) 300,00

In the first month of the following year (01/2025), the deferral is reversed and recorded as revenue:

Posting Debit to account Credit to account Amount
4 Deferred revenue (0990) Revenue 19% VAT (8400) 300,00

With respect to the booking accounts, the following postings will be recorded:

Debtor
Posting Debit Credit
1 900,00 (04/2024)
2 228,00 (04/2024)
3 300,00 (04/2024)
Revenue 19% VAT
Posting Debit Credit
1 900,00 (04/2024)
4 300,00 (01/2025)
VAT 19%
Posting Debit Credit
2 228,00 (04/2024)
Deferred revenue ("Passive Rechnungsabgrenzung")
Posting Debit Credit
3 300,00 (04/2024)
4 300,00 (01/2025)

Required Configuration

JustOn Billing & Invoice Management controls the booking data creation using dedicated configurations on invoice line items, G/L account settings, collective account settings and global settings. Enabling the bookkeeping data generation for the outlined use case involves the following configuration steps:

In addition, your accounting may optionally require to configure booking texts, allocate cost centers or profit centers, or specify cost objects.

Activating Booking Data Creation

In order to globally enable the creation of bookkeeping data, the feature must be activated in the global settings.

  1. Click to enter Setup, then open Custom Settings.

    In Salesforce Lightning, navigate to Custom Code > Custom Settings.

    In Salesforce Classic, navigate to Develop > Custom Settings.

  2. Click Manage in the row of Global Settings.

  3. Click Edit in the Default row.
  4. Select the checkbox Create Bookkeeping Data.

  5. Click Save.

    Once enabled, the bookkeeping data is generated automatically upon invoice finalization.

Info

Once created, the booking details can no longer be modified or deleted. In case of errors, however, you can regenerate booking details for invoices.

Enabling Booking Accounts

To provide for the correct booking account allocation, you create dedicated G/L Account Assignment Rules and Collective Account settings.

Booking revenue and taxes including deferred revenue according to the outlined use case requires the following booking accounts:

Account name Account no.
SKR 03		 Configuration Type Booking Detail Target Field
Revenue 19% VAT 8400 G/L Account Booking Account
VAT 19% 1776 Collective Account Booking Account
Deferred revenue 0990 Collective Account Booking Account
Debtor 12345 Debtor number Contra Booking Account

Remember that depending on your accounting system, the booking account numbers may differ.

  1. Create an Assignment Rules - G/L Account setting to book the revenue.

    To cover the use case for revenues with 19% VAT, you need the following setting:

    Name G/L Account Tax Code Business Entity
    Revenue 19% VAT 8400 DE_19 business entity name

    For details, see Configuring G/L Account.

  2. Create a Collective Account setting for the tax bookings.

    To cover the outlined use case, you need the following setting:

    Name Booking Account Tax Code Type
    VAT 19% 1776 DE_19 Tax

    Depending on your requirements, your Collective Account setting may, in addition, need to define the Business Entity.

    For details, see Configuring Collective Accounts.

  3. Create a Collective Account setting for the deferred revenue bookings.

    To cover the outlined use case, you need at least this setting:

    Name Booking Account Business Partner Account Type
    Deferred 0990 debtor number Deferred
    Account debtor no for deferred revenue

    By default, JustOn Billing & Invoice Management fills the field Contra Booking Account in booking details for deferred revenue using the value of the Business Partner Account field of the corresponding Collective Accounts custom setting record. Your business use case, however, may require to use the value of the custom field ON_DebtorNo on the account instead. To support this scenario, activate the corresponding global setting Use Debtor No for Deferred Revenue.

    1. Click to enter Setup, then open Custom Settings.

      In Salesforce Lightning, navigate to Custom Code > Custom Settings.

      In Salesforce Classic, navigate to Develop > Custom Settings.

    2. Click Manage in the row of Global Settings.

    3. Click Edit in the Default row.
    4. Select the checkbox Use Debtor No for Deferred Revenue.
    5. Click Save.

    Depending on your requirements, your Collective Account setting may, in addition, need to define the Business Entity.

    For details, see Configuring Collective Accounts.

  4. Enable the debtor account number.

    Depending on your requirements, the way to define the debtor account number differs:

    For customer-specific debtor numbers, you use the Account field ON_DebtorNo.

    1. Navigate to the fields list of the Account object.

    2. Create the following new field.

      API Name Data Type Description Example Values
      ON_DebtorNo Text (255)
      or
      Formula      		 Specifies the contra account number for booking details. If configured as a formula, it can determine the value based on other fields. 12345
      AnotherField__c

    To support collective debtors (or debtor groups), you use the Invoice field DebtorNo.

    Using a collective debtor number via the Invoice field DebtorNo does not require a collective account setting. Instead, you just set the intended booking account number to be transferred to the booking detail.

    1. Navigate to the fields list of the Invoice object.

    2. Create the following new field.

      API Name Data Type Description Example Values
      DebtorNo Text (255)
      or
      Formula      		 Specifies the contra account number for booking details. If configured as a formula, it can determine the value based on other fields. 12345
      AnotherField__c

    If the field is configured as a text, you can use the ON field mechanism to have it set using values from invoice source objects. Be aware, however, that if the field is configured as a formula, the ON field mechanism will not overwrite the DebtorNo value.

    Info

    When creating booking details, the Invoice field DebtorNo takes precedence over the Account field ON_DebtorNo. If the Invoice field DebtorNo is empty or does not exist, JustOn Billing & Invoice Management uses the Account field ON_DebtorNo to set Contra Booking Account in the booking detail.

Setting Revenue Recognition Rule

JustOn Billing & Invoice Management writes deferred revenue bookings according to the revenue recognition rule set in the invoice line item field Recognition Rule.

The ON field mechanism is a likely option for having the revenue recognition rule specified automatically on the invoice line item when generating invoices. Alternatively, you can use Salesforce flows or other automation tools.

To make use of the ON field mechanism, you set the field ON_RecognitionRule on the invoice line item source object:

  1. Navigate to the fields list of the corresponding object.

  2. Create the following new field.

    API Name Data Type Description Use Case Value
    ON_RecognitionRule Text (255)
    Formula (Text)
    Picklist    		 Specifies the revenue recognition rule to be applied, is copied to the invoice line item during the invoice run. Calendar Year

    For help about creating fields, see Managing Object Fields.

Produced Booking Details

Once configured accordingly, JustOn Billing & Invoice Management produces the following booking details, covering the outlined use case:

First service period month (04/2024)
# Booking Period Amount Debit/Credit Flag Booking Account Contra Booking Account Type
1 04/2024 900,00 H 8400 12345 Revenue
2 228,00 H 1776 12345 Tax
3 300,00 H 0990 12345 Deferred
First month of the following year (01/2025), re-posting the deferred revenue
# Booking Period Amount Debit/Credit Flag Booking Account Contra Booking Account Type
4 01/2025 300,00 H 8400 12345 Revenue
5 -300,00 S 0990 Deferred