Automating Deferred Revenue in PRO Software

Managing deferred revenue is essential for businesses that receive payments in advance for goods or services to be delivered in the future. PRO Software Solutions automates deferred revenue entries and reversals, ensuring accurate financial tracking and compliance with accounting standards.

This guide outlines how to set up and configure deferred revenue in PRO Software.

What is Deferred Revenue?

Deferred revenue, also known as unearned revenue, represents payments received before delivering goods or services. These payments are recorded as liabilities until the revenue is earned over time.

By automating deferred revenue entries in PRO Software, businesses can: ✅ Accurately track revenue recognition

✅ Automate financial reporting and compliance

✅ Reduce manual accounting errors

How to Set Up Deferred Revenue in PRO Software

To enable automated deferred revenue entries and reversals, follow these steps:

Step 1: Create a Deferred Revenue Liability Account

1. Go to Accounting > Configuration > Chart of Accounts.
2. Click "Create" to add a new liabilities account.
3. Assign a Code, Name, and Type for the account (e.g., “Deferred Revenue” under Liabilities).
4. Click Save to finalize the account setup.

Step 2: Enable Deferred Revenue in PRO Software

1. Go to Accounting > Settings.
2. Check the box to enable Deferred Revenue.
3. Select the liability account created in Step 1.
4. (Optional) Enable Instant Reverse to post entries to the General Ledger (GL) immediately upon invoice validation.
   • Recommended: If Instant Reverse is not enabled, deferred revenue entries will automatically reverse at 12:01 AM on the 1st of each month.

Step 3: Configure Deferred Revenue for Products

To automate deferred revenue postings, you must configure each product individually.

1. Go to Accounting > Customers > Products.
2. Select a product that requires deferred revenue automation.
3. Toggle the switch ON to enable deferred revenue for that product.
4. Save the changes.

This ensures that when this product is invoiced, the deferred revenue automation will apply.

Step 4: Test Deferred Revenue with an Invoice

To verify that deferred revenue automation is working correctly:

1. Create an invoice using a product configured for deferred revenue.
2. Ensure the Billing Period crosses into a new month.
   • Deferred revenue only applies when the billing period extends beyond the current month.
3. Check the Billing Period for each Invoice Line.
   • The initial revenue entry will match the invoice date.
   • The deferred revenue entry will be posted for the 1st of the next calendar month.
4. Click Save and Validate the Invoice.

💡 Pro Tip: After validating the invoice, navigate to the Other Info tab to view the deferred revenue entry and its scheduled reversal.

Benefits of Using PRO Software for Deferred Revenue

🔹 Automated Entries & Reversals – No manual tracking needed, reducing accounting workload.

🔹 Accurate Financial Reporting – Deferred revenue is recorded and recognized in the correct periods.

🔹 Better Cash Flow Management – Helps businesses forecast income and expenses effectively.

🔹 Regulatory Compliance – Ensures businesses follow standard accounting practices for revenue recognition.

Get Started with Deferred Revenue Automation

Automating deferred revenue in PRO Software Solutions saves time and enhances financial accuracy.