Weekly Dynamic: Revenue and Expense Deferrals

I am still getting calls and emails on Revenue and Expense Deferrals in Dynamics GP more than a two weeks after I showed this in couple of presentations at Convergence 2012. Maybe deferring insurance expense was really clear example for people to follow. Anyway, I thought I would put more information up here.

• Revenue/Expense Deferrals allows you to defer revenue and expenses into the future. It’s sometimes abbreviated as RED by consultants.
• This module is included with Business Ready Licensing Advanced Management and it’s available for purchase for those still on module based licensing. It is not expensive for the pain it saves.
• The module is a separate checkbox on the install so companies may own it but not have it installed.
• Deferrals can automatically post into the future into closed periods.
• Deferral profiles can be used to simplify and provide consistency to the deferral process.
• The original transaction can be distributed to a prepaid account or to an expense account. Revenue/Expense deferrals can be configured either way.
• You defer a DISTRIBUTION LINE amount. You can defer different lines differently. You can also choose to not defer the entire amount.
• DO NOT DEFER THE AP or AR line. You won’t be happy.
• There are some small setup steps in Tools-Setup-Financial-Deferral & Deferral Profile.

I have a previous tip with revenue/expense deferral specifics from September 2010. There is a video up on YouTube. Also Microsoft has a nice, if somewhat older FAQ.

Frank Hamelly and I covered this as one of the most underused modules in GP last year but no one seemed to notice. It’s nice to see that it’s finally catching on.

Deferring Revenue and Expense in Dynamics GP | Dynamics GP Insights

Christina Phillips looks at Deferring Revenue and Expense in Dynamics GP.

I love how simple this can be to accomplish in Dynamics GP.

Weekly Review: Quick and Dirty Deferrals

Dynamics GP 10 has a number of options to deal with deferral transactions, there is the appropriately named Revenue/Expense Deferrals module and the Contracts portion of Field Service can also handle deferrals. But what if you don't need all that functionality. What if you just need need a consistent way to deal with spreading that annual insurance payment over 12 months?

One option is to use recurring batches. In our insurance example above, the initial transaction would be a credit to AP and a debit to accrued expenses via the the AP module. After that, setup a recurring GL batch with a monthly frequency and a duration of 12.

The transaction in this batch would credit accrued expenses and debit insurance expense for 1/12th of the total. I find it useful to date these transactions for the 15th of the month since that works regardless of whether you are using a month based on the calendar, 4-4-5, 5-4-4, 4-5-4 or some other month definition.

Use 1 batch per transaction. It's just cleaner over the long run since sometimes these transactions change. For example, if you change insurance companies mid year, you'll need to delete the recurring batch and you'll have the remaining accrued expenses to offset any refund. If you mix multiple transactions in a batch it's harder to keep everything straight.

I like to use either an underscore (_) or a z at the front of the batch name. This puts all the recurring batches at the top or bottom of the batch list respectively, making them easy to find.

Then once a month, post all your recurring batches and you're done. When the last recurring transaction from the allocation is posted, the batch deletes itself so you can't post beyond the end point. We all end up with allocation transactions sooner or later and now you've got a process to deal with them that doesn't require a lot of work.

Originally Posted by Mark at 11/10/2008 09:10:00 AM

Weekly Dynamic: Defer Accounts Payable Transactions

Previously I worked for a company that purchased content. We would buy video, like TV shows, and have the right to use them for a period of time. We would often have to pay up front and then need to spread the expense over say, a year. Well, not only is this easy to do in Dynamics GP, it can be done at the point of the AP invoice. This is great for things like insurance too.

In this example, we’ll use the Profit and Loss option in Deferral setup. This setting let’s the user enter ultimate expense account and then defer the transaction.

To make this happen in AP:

1. Enter an AP transaction
2. Click the distribution button
3. Select the Expense line to defer
4. Select Additional | Deferral from the menu at the top
5. Set the End of Period date, Method and Deferral account
6. Click Ok

Dynamics GP will adjust the transaction to move the expense to the deferral account and then it will create and post transactions to recognize the expense in the future. It doesn’t get much easier than that.