Deferred Revenue

Start with an Estimate. Invoice from the estimate for each period. This is Progress Invoicing and you can read about in the Help system and it is in the video tutorials: Help menu > Learning Center.

It appears that you want to create an invoice and collect from your customer????

Example

You want to invoice for  $12,000.00  over a 12 month period

If you only want to invoice for $1,000.00 a month then use progress billings as qbteachmt recommends. You can also just create a memorized invoice to be entered monthly for 12 months.

If you  want to invoice $12,000.00 in Jan  recognize the income Jan-Dec $1,000.00 a month.

Create an item pointing to a Deferred Revenue (Other Current Liability)

Use this item in an invoice for $12,000.00

Create a memorized invoice  for the sale of the product or service to be entered monthly for 12 months.  

Use the appropriate sale item. $1,000.00

Use the New Deferred Revenue Item as a negative  ($1,000.00)

This will generate a Zero invoice.

If you don’t want a Zero invoice you can issue a memorized  credit memo of $1,000.00  for the New Deferred Revenue item. Instead of applying it on the invoice.

"Take our scenario, 100 customers on 12 month service contracts. Pay up front and we recognize 1/12 the revenue for 12 months."

Generate an Estimate for a customer for the service item fee, qty = 12.

Invoice from the estimate each month, electing not % or $ but qty progress.

Use a progress template for your on screen view and you can monitor when this customer is "all done."

Or:

Create an invoice for the customer for the one month. Memorize it and set it to come up monthly automatically and set the number remaining as this is a count down function.

Then, for each month, use the same prepayment item on a credit memo for the customer name and apply it to the invoice. This clears the liability account and recognizes the income and satisfies the unpaid invoice.

 If you use accrual basis of accounting you can run a report on your Deferred Revenue and determine the balance of each of customer. If you invoice for $12,000.00 credited Deferred Revenue you can see each debit as it is applied each month, which is what you are probably doing in your spread sheet. You can sort, even reconcile, show only un-cleared transactions so after the 12,000.00 is paid they will not appear on the report.

I have not looked for a 3rd party program because, have always used QuickBooks, but you can check www.marketplace.intuit.com

As a practice we don't start recognizing until the payment has been received.

Are you creating reports on a Cash Basis?

There are issues with a Cash Basic Balance Sheet when transactions hit other Balance Sheet Accounts. Example: Account Receivable and in your situation Deferred Revenue. http://support.quickbooks.intuit.com/support/Articles/INF12397

I always recommend that my clients use Accrual to run their business, you can still file your taxes on a Cash Basis. If you want to know Cash Basis Income - use the P&L.

On most tax forms you can reconcile Tax vs Books http://www.ehow.com/facts_5849678_define-m_1-adjustments-tax-returns.html

Intuit recommends that you make the adjustments in a copy of the data file and they are suggesting that this is done by accountants at year end to match tax return. Not to the client’s file.

Entering your cash basis adjustments in a copy of the data file affords you three major benefits:

1. You preserve the year-end accrual basis reports in the original file

2. There is no need to enter reversing entries.

3. You do not have to adjust the subsidiary detail for Accounts Receivable, Accounts Payable, Bank Accounts or Undeposited Funds. 

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