[Subscription Billing] Overview of Revenue and expense deferrals in Microsoft dynamics 365 finance and operations: Part-4

This blog is the next part of subscription billing series where we are going to talk about Revenue and expense deferrals. Objective of this blog is to set the base about overall process and get an idea what this feature does. After that I will write next few blogs to drill down to each critical scenario.

If you have not visited the previous blogs, please do visit then only this will make sense for you: Part-1 , Part-2 and Part-3

Revenue and expense deferrals let you to control revenue recognition at the line-level. Revenue and expense recognition processes are managed through deferral schedules to eliminate manual recognition processes.

What is deferral? Deferral in account is something which we defer posting to actual Ledgers at the time of original transactions and later recognise to actual ledger posting.

Why we do? This is done so that we can have accounting of transaction in actual periods rather than having in one single period.

Example: Lets say we buy Netflix subscription of worth 1200 for an year in the month of Jan, now when Netflix generates the invoice for this subscription, should it post revenue of 1200 in Jan month?? No, it shouldn’t, because this revenue is for next 12 month. So at this point of time when we post invoice in Jan , revenue gets deferred to the deferral ledger instead actual revenue then later ever month we transfer from deferral account to respective month which which is called as recognition.

Now in this blog we are going to discuss the end-to-end high-level process and then in upcoming blogs we will drill down to different scenarios and concepts.

Here is the overall process:

Step-1: Configuration

Step-2: Create Schedule and apply deferral

Step-3: Generate invoice and view transactions

Step-4: View active schedule

Step-5: Process deferral recognition

Step-6: View recognition entries

That’s it for this blog, now in next blog we will break down this whole process and understand each concept.

Thank you !!! Keep reading and sharing !!!


  1. Thanks for the blog. Could you please explain Journal entries with reason as a part of blog why COGS is credited and what is that 12rs amount and 1000rs.


    • When you posted actually sales invoice both revenue and cogs got deffered ..1000 is revenue and 12 cogs

      Later in recognition entry this got transferred to actual revenue and cogs account


  2. Hello, the “Recognition batch processing” dialog does not provide the Cut off date. In my case only the first month was recognized, not the remaining 11. Did you try to use it? Did it work for you? The “Recognition processing” does have a batch job in the “View preview” form, but the batch job just did not work properly. Thank you


  3. 2/2 I am missing the “Late selection” parameter so the batch job can run in the background and all new schedules that will be created in the future would be executed by the batch job. Now you need to run the batch job manually after “each sales order”..


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