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How to model "permanent" invoices?

← Billing & Invoice Management FAQ

Your business may require to bill a product with a large service period. The payments, however, are to be distributed across smaller intervals, and so do the revenue and tax bookings. This is common practice in the context of rental or lease contracts, for example: you regularly provide the same service at the same price over a larger period. In Germany and Austria, this approach is known as Dauerrechnung ("permanent invoice").

Solution Outline

To model this scenario in JustOn Billing & Invoice Management, you combine the Permanent Month and Permanent Quarter revenue recognition rules with the service period-based installments Service Month or Service Quarter, respectively to request synchronized payments.

Example

Assume, for example, you lease machinery – usually, on a yearly base. Now a customer rents a machine for less than one year from 2023-10-10 to 2024-06-20. This is why a billing factor < 0 applies, which reduces the price. You issue one invoice on 2023-07-20 (and hence, the service period starts on 2023-07-20) with one invoice line item that represents the charge for the entire service period.

# Quantity Unit Price Billing Factor Billing Unit Service Period Start Service Period End Tax Rate Pos Total (net)
1 1 1200,00 0,69803 Year 2023-10-10 2024-06-20 19% 837,64
Subtotal Net 837,64
Tax 159,15
Grand Total 996,79

You agree, however, on split payments equally distributed on a monthly or a quarterly base. Likewise, you equally distribute the revenue and tax bookings across the service period, in accordance with the received payments.

To cover this use case, the following conditions must be met:

  • An installment with Period set to Service Month
  • A G/L account setting for revenue bookings, a collective account setting for tax bookings, and another collective account setting for deferred revenue bookings
  • Source ON fields or custom processes to set Recognition Rule to Permanent Month upon invoice generation on the produced invoice line item
# Service Period Start Service Period End Amount
1 2023-09-20 2023-10-19 39,67
2 2023-10-20 2023-11-19 119,00
3 2023-11-20 2023-12-19 119,00
4 2023-12-20 2024-01-19 119,00
5 2024-01-20 2024-02-19 119,00
6 2024-02-20 2024-03-19 119,00
7 2024-03-20 2024-04-19 119,00
8 2024-04-20 2024-05-19 119,00
9 2024-05-20 2024-06-19 119,00
10 2024-06-20 2024-07-19 5,12

Produced booking details

# Booking Date Type Amount Tax Base Amount
1 2023-09-20 Deferred 33,33
2 2023-09-20 Tax 6,33 33,33
3 2023-10-10 Deferred -33,33
4 2023-10-10 Revenue 33,33
5 2023-10-20 Deferred 61,29
6 2023-10-20 Tax 19,00 100,00
7 2023-10-20 Revenue 38,71
8 2023-11-01 Deferred -61,29
9 2023-11-01 Revenue 61,29
10 2023-11-20 Deferred 63,33
11 2023-11-20 Tax 19,00 100,00
12 2023-11-20 Revenue 36,67
13 2023-12-01 Deferred -63,33
14 2023-12-01 Revenue 63,33
15 2023-12-20 Deferred 61,29
16 2023-12-20 Tax 19,00 100,00
17 2023-12-20 Revenue 38,71
18 2024-01-01 Deferred -61,29
19 2024-01-01 Revenue 61,29
20 2024-01-20 Deferred 61,29
21 2024-01-20 Tax 19,00 100,00
22 2024-01-20 Revenue 38,71
23 2024-02-01 Deferred -61,29
24 2024-02-01 Revenue 61,29
25 2024-02-20 Deferred 65,51
26 2024-02-20 Tax 19,00 100,00
27 2024-02-20 Revenue 34,49
28 2024-03-01 Deferred -65,51
29 2024-03-01 Revenue 65,51
30 2024-03-20 Deferred 61,29
31 2024-03-20 Tax 19,00 100,00
32 2024-03-20 Revenue 38,71
33 2024-04-01 Deferred -61,29
34 2024-04-01 Revenue 61,29
35 2024-04-20 Deferred 63,33
36 2024-04-20 Tax 19,00 100,00
37 2024-04-20 Revenue 36,67
38 2024-05-01 Deferred -63,33
39 2024-05-01 Revenue 63,33
40 2024-05-20 Deferred 61,29
41 2024-05-20 Tax 19,00 100,00
42 2024-05-20 Revenue 38,71
43 2024-06-01 Deferred -61,29
44 2024-06-01 Revenue 61,29
45 2024-06-20 Tax 0,82 4,31
46 2024-06-20 Revenue 4,31

To cover this use case, the following conditions must be met:

  • An installment with Period set to Service Quarter
  • A G/L account setting for revenue bookings, a collective account setting for tax bookings, and another collective account setting for deferred revenue bookings
  • Source ON fields or custom processes to set Recognition Rule to Permanent Quarter upon invoice generation on the produced invoice line item

Produced installments

# Service Period Start Service Period End Amount
1 2023-07-20 2023-10-19 38,81
2 2023-10-20 2024-01-19 357,00
3 2024-01-20 2024-04-19 357,00
4 2024-04-20 2024-07-19 243,98

Produced booking details

# Booking Date Type Amount Tax Base Amount
1 2023-07-20 Deferred 32,61
2 2023-07-20 Tax 6,20 32,61
3 2023-10-10 Deferred -32,61
4 2023-10-10 Revenue 32,61
5 2023-10-20 Deferred 261,29
6 2023-10-20 Tax 57,00 300,00
7 2023-10-20 Revenue 38,71
8 2023-11-01 Deferred -100,00
9 2023-11-01 Revenue 100,00
10 2023-12-01 Deferred -100,00
11 2023-12-01 Revenue 100,00
12 2024-01-01 Deferred -61,29
13 2024-01-01 Revenue 61,29
14 2024-01-20 Deferred 261,29
15 2024-01-20 Tax 57,00 300,00
16 2024-01-20 Revenue 38,71
17 2024-02-01 Deferred -100,00
18 2024-02-01 Revenue 100,00
19 2024-03-01 Deferred -100,00
20 2024-03-01 Revenue 100,00
21 2024-04-01 Deferred -61,29
22 2024-04-01 Revenue 61,29
23 2024-04-20 Deferred 168,36
24 2024-04-20 Tax 38,95 205,03
25 2024-04-20 Revenue 36,67
26 2024-05-01 Deferred -100,00
27 2024-05-01 Revenue 100,00
28 2024-06-01 Deferred -68,36
29 2024-06-01 Revenue 68,36