Deferral Life Cycle

Overview

The deferral header table has a single record for any one deferred invoice line item and always has 1 or more deferral detail records associated with it. For deferred products with discounts applied to them, the discounts must also be deferred and so, deferred discounts also become a line item in the invoice. Therefore, they also get their own deferral header and detail records.

Deferral Status

The deferral header has been designated with a Status column and there are 6 well-defined statuses that identify the current state of the deferral. These statuses closely reflect real-world events that can occur on a deferral. This new deferral status identifies the major states the deferral is currently in.

Deferral Detail Types

The deferral detail records have a Type column and there are ten deferral detail types defined that combine with each other and the deferral status on the header record to show all the different events that have occurred on the deferral. Each detail record designates things such as which period it is associated with, the amount for the current detail record, deferred and revenue accounts, price keys, batch period keys, and, in certain cases, links to transaction records.

Actionable Deferral Detail Types

Some deferral detail types are actionable in accounting and those types either define a schedule or are offsetting a schedule. For example, if a 12-month membership is bought and deferred over all twelve months, without any kind of catch-up amounts or special circumstances, then there would be 12 deferral detail records of type ‘Schedule’. There would also be 12 corresponding deferral detail records with a type of ‘Recognize’ that offset each schedule. At this point the deferral would have a header status of ‘Complete’ and the deferral balance would be $0.00. This example makes a lot of assumptions but is a simple example of the general workflow of a deferral once it is created.

There can also be ‘Void’ deferral detail types, which will add void records for all the schedule details, including the recognized schedules. Additionally, there are ‘Cancel’ detail types that offset only the unrecognized schedules. Finally, there are partial cancellations in which the ‘Cancel’ types would offset a portion of schedules but leave remaining quantities for recognition. More detail on partial cancellations can be found later in this document.

Non-Actionable/Event History Deferral Detail Types

The other deferral detail types that are not considered actionable in the accounting system are there to simply record that a specific event occurred. The event occurred on the deferred line item or on a related record, and needs to be recorded so that the date, period, amount, and action take can be saved and pulled up again later for this deferral. These items include values such as the ‘Open’, ‘BatchClosed’, and ‘Closed’ deferral detail types.

All deferral statuses and detail types and are defined in a table for further discussion in this section of the document.

Using the combination of Header Status and Detail Type records, the true state of a deferral can be persisted in the data and conveyed back to NetForum code, user screens, and reports. A minimum set of calculations and database joins are needed to perform the recognition process because the schedules, amounts, and period dates in which to recognize are all calculated before the recognition process begins and are easy to read back from the database.

Table of Deferral Statuses

Order of Progression	Status	Triggering Event	Batch Status	Notes
1	Open	Invoice with Deferral created	Open	Deferred Line item is new or being rewritten
2	Expected	Deferral Term dates become known (Dates Flipped) before batch close	Open
3	Pending	Deferral Invoice Batch Closes before Dates are Flipped	Closed
4	Available	Deferral is ready for recognition, but no revenue has been recognized yet, dates are flipped, and the Batch is closed	Yes
5	Recognizing	Denotes that deferral has gone past the Available state and has recognized any amount of revenue but not all revenue.	Yes	Was previously available or still is Has at least one deferral detail with a type of Recognize Has one or more periods not recognized
6	Complete	All scheduled recognitions were recognized, canceled, or voided and the deferral has a balance of $0.00.	Closed	Note: Partial cancelations would not complete the deferral unless it is a partial cancel on top of another and it is cancelling the final invoice detail quantity and the deferral balance is $0.

Table of Deferral Detail Types

Deferral Detail Type	Description	Period Key from
Open	Event: Invoice with Deferral created and saved One record per price split	Invoice Batch Period; Except for memberships with Payment -based Flip Date Condition, then it is the Payment Batch Period
Expected	Event: Deferral Term dates become known One record per price split	Same as Open
Pending	Event: Deferral Invoice Batch Closes before Dates are Flipped One record per price split	Same as Open
Schedule	Must be offset with a cancel, void, or recognize record to balance the deferral Deferral Dates have flipped (can be before or after Batch is closed) One full schedule per price split Schedules must be offset by a Recognize, Cancel, or Void record	Period within the term dates in which this schedule should recognize revenue
BatchClosed	Event: Denotes that the invoice batch was closed Only one batch closed record for any deferral, does not split with prices	Period to which the batch that closed was tied to
Available	Event: Denotes Deferral is ready for recognition, but nothing recognized yet. Dates are flipped, the Batch is closed, and the schedule is written out One record per price split	Same period as the Open record
Recognize	A recognize record is written during revenue recognition to offset the schedule record(s) for a deferral where the schedule is set to recognize on the period being recognized. There is a recognize record for every schedule and there might be multiple schedule for a period if there were split prices for the deferred product.	Period Key is the key of the period being recognized when the record is written and the same period key as the schedule for which the recognize record is offsetting.
Cancel	A cancel record is written to offset schedules where the line item or invoice is canceled. Cancel records cancel both a schedule record and its quantity so partial cancels are possible Cancels can only occur on schedules that have not been recognized.	Period key is the key of the period that is current when the deferral is cancelled.
Void	A void record is written to offset schedules where the line item or invoice is void. A void record is written for every item in the schedule, regardless if there have been recognitions or not. A void will always void all the schedules and complete the deferral.	Period key is the key of the period that is current when the deferral is voided.
Closed	Event: A close record is written when the last recognition is completed on a deferral or a cancel is made that cancels all remaining schedules and quantities or the deferral is voided. The close record denotes the date and period in which the deferral was closed out and went into complete status.	Period key is the key of the period that is current when the deferral is completed.