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Level 1

Recognize revenue for licenses sold included in invoices

Hi,

 

I would like to know what is the best way to invoice  clients for software licenses  (like QBO :P).

How can we accelerate the process with 50 current license to accrure each month ?

 

Context:

- Knowing that the license is for a specific period, lets say 1 year, and that we have to recognize a portion of  revenue from this license sold each month.

- I can set a service linked to an unrecognized revenue account ( liability account)

- Can we automate revenue recognition based on a << service date period fiel>> in QBO ? Or should I track the revenue recognition in an excel file ?

 

Ex : we sell 1 licence for 100 CAD for the following period :January 01 2020 to December 31 2020

10 Comments
QuickBooks Team

Recognize revenue for licenses sold included in invoices

Hi there, @Benji09

 

Thank you for posting to the Community. 

 

We can accelerate the process by dividing it. Instead of creating one transactions for whole year we can divide it, then we need to create recurring transaction per month. This allow your customers the options to choose when and how much to pay.

 

To create recurring transaction here's how:  

  1. On the left pane click Sales
  2. Under Customers, select create Invoice
  3. Fill out the form with information you want to appear in every invoice. 
  4. Under Payment Option, select the type of payments that you accept. 
  5. Select Make recurring
  6. Personalize the Recurring Invoice 
  7. Once done Save template

 

rec..PNG  

 rec.1.PNG  

 rec2.PNG  

Once finished, you'll be able to view the recurring invoice on Recurring Transactions. 

 

I've attached additional article to help you guide on how to set schedule for recurring transactions: 

 

I'm just a post away if you should have any questions. Have a lovely day.

Level 1

Recognize revenue for licenses sold included in invoices

Thanks for your answer!

So if I understand I will only send one invoice to the clients with service item linked to deferred revenue liability account.

And at the en of each month an automated invoice will be created with two service items :

- 1 item to the portion from deferred revenue

- 1 item to recognize the portion of the monthly revenue

So the total of each recurring invoice will be 0$.

 

Looks fine to me ! 

 

Suggestion to QBO DEV : a period field with starting and ending date would be amazing to automate revenue recognition and immobilization amortization I guess ?!

 

Moderator

Recognize revenue for licenses sold included in invoices

You're on the right track, @Benji09!

 

I'll also take note of your request and submit it directly to our developers so they'll know of your need to customize a certain field for preferred dates.

 

I've got you these articles for future updates about the features of our product:

Keep me posted in the comment section down below if you have any other questions. I'm always around happy to lend a helping hand.

Level 15

Recognize revenue for licenses sold included in invoices

as another option, consider a recurring billing app and sync it with your QBO

https://mbsy.co/DJtTL

 

Hope it helps.

Level 1

Recognize revenue for licenses sold included in invoices

Hi there, 

Thanks it helps me for another matter but in this case the client pays the whole amount upfront. So one bill and monthly automated adjusting entries to recognize revenue I guess.

QuickBooks Team

Recognize revenue for licenses sold included in invoices

Hi @Benjie09.
 

You have to create a prepayment for your customers and manually enter the payment.

 

Let's start creating an account for posting the deposit you receive from your customer. Let me walk you through the steps.

 

Here's how:

  1. Go to Accounting and select Chart of Accounts.
  2. Choose New at the top.
  3. In the Account Type drop-down, select Other Current Liabilities.
  4. In the Detail Type drop-down, choose the type of account you want to create.
  5. Enter Customer deposit in the Name field.
  6. Fill in the field boxes.
  7. Hit on Save and Close.

 

Next, create the item you’ll use to invoice customers for the deposits. To add a Service item, please follow these steps:

  1. Go to the Gear and choose Products and Services.
  2. In the Products and Services window, select New.
  3. Then choose Service.
  4. In the Name field, enter Customer Deposit.
  5. Fill in the field boxes.
  6. Hit on Save and Close.

 

Once done, you can start with invoicing the customer for the initial payment. This allows the deposit to be shown deducted from the final invoice total, where the customer can see they are receiving that credit.
 
When you create a Bank Deposit, you use the Accounts Receivable with the name of the customer, and then you can apply this to the invoice through Receive Payment.
 
Let me know if you have follow-up questions about customer prepayments. I'm here to help.

 

Level 1

Recognize revenue for licenses sold included in invoices

Hi,

 

Could you please write the same instruction for the case if the services are rendered prior to invoicing. For example, we provide services in June, and issue the invoice on the 1 day of July. We use the ship date (June), but in reports this revenue goes to July.

How can we manage to book the income in PL in June and what would be the date of AR? 

QuickBooks Team

Recognize revenue for licenses sold included in invoices

Hi there, @vshulakova.

 

You can change the invoice date to June so that the Profit and Loss report will be corrected. I'd be glad to show you the way.

 

Here's how:

 

  1. Go to the Sales tab and select Invoices.
  2. Look for the transaction you've wanted to change the date and click on it.
  3. Change the date of the invoice to June. Here's a screenshot to see how it looks like.


     
  4. Once done, select Save and close.

 

Moreover, you can also use a sales receipt transaction if you haven't created an invoice. You can also customize the template before sending it. For more information about this process, please check out this article: Customize invoices, estimates, and sales receipts in QuickBooks Online.

 

I'd like to share this reference whenever you're going to customize your report in QuickBooks: Customize reports in QuickBooks Online. This also contains a sub-article about the popular custom reports in QuickBooks.

 

I'll be a few clicks away if you have other concerns or questions. Take care and have a beautiful day.

Level 1

Recognize revenue for licenses sold included in invoices

@MarsStephanieL , many thanks for your prompt reply!

But in case, if I have to issue an invoice on the 1 day of the next month under Contract? If I cannot change the date of invoice? 

Moderator

Recognize revenue for licenses sold included in invoices

Thanks for coming back, vshulakova.

 

If you're asking if you can change the invoice date when you issue an invoice using the first day of next month which is August, then the answer is yes.

 

For  the steps on how to change  your invoice date, you can refer to the steps previously shared above.

 

In addition to the articles shared by my colleague MarsStephanieL, I'm leaving you this article about other way to edit transactions like invoice in QBO: Find, review, and edit transactions in account registers.

 

Drop me a reply if you have additional questions. I'd be more than happy to help, Keep safe and have a wonderful day ahead!

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