Subscriptions are usually prepaid. Although payment has been received, it has not been earned until all the issues in the subscription have been sent to the customer. The revenue therefore has to be deferred and portions of this revenue are earned when an issue is despatched. When a Subscription List is created the Payment Type is nominated and the options are Pay as you Go or Payment in Advance. The PIA (payment in advance) method uses the Deferred Revenue processes if the item has been classified as a deferment Item.
All transactions processed through the Inventory and Billing modules post to the General Ledger using the normal General Ledger Interface. This means sales are recognised immediately. (Debit Debtors and Credit Sales).
Process flow
The following processing steps can be used to generate the Subscriptions Based deferred revenue.
- The setup of deferment revenue starts off in the setup of the subscription list. From the subscription management module in the Distribution Module and within the menu ‘Subscription List’, the main field that affects deferment revenue is the field ‘Subscription Term type/length’ and the ‘Charge Method’.
- The customer orders must be created against the subscription list.
- The product list must be created and the product list type field indicates the Activity type and charge type to be used for PIA (Payment in Advance).
- The rule on how the revenue should be recognized is setup in General Ledger under the option Deferment Revenue – Formula Maintenance (DSM420).
- The next step would be to select the Subscription Order Release option, enter the Sub List and Product List.
- Then select Release Run Management. The status of the run is ‘R’ and to complete this, select option 2 against the required run. This takes a few moments and the status changes to ‘C’.
- Finalize the order through Distribution Processing for pending = P, Batch printing = K, Picking slips = D, Document printing = A, Invoice dispatch = I and Completed status = C.
- The orders must be status ‘C’ before the deferred revenue can be generated.
- Next select the deferred revenue generation (DSO426) from General Ledger module. This calculates the deferment revenue for the month.
- Run the End of Day the GL menu, to post the journals.
