New (Optimized) Deferral Process Overview
Deferred Revenue is a complex process with many business and technical rules to consider. A new process has been devised to track deferred revenue using new tables and a persisted recognition schedule where each schedule is bound to a specific fiscal period and subsequently offset during the revenue recognition process of said period. This creates a ledger-like structure for deferred revenue that is easy to track.
It has the concept of a deferral balance, which is simply the total amount of unrecognized revenue. This makes it easy to create reports, as the data is physically visible in the tables. Every deferred line item in any given invoice will now use the new tables and have a detailed history of events that occurred over the life of the deferral record.
The key concepts of the new deferral tables and the data persistence strategy, reporting changes, and data conversion are covered in this section.
Persisted State and Event History
To make it easier to understand, enhance, and troubleshoot, the new deferred revenue process has been clearly defined and broken down into several parts. At the database level, there are now two deferral tables:
- a deferral header table
- a deferral detail table
The header table contains the status of the deferral and a little bit of setup data, while the detail table holds the specific set of events or actions that occurred or need to occur on the deferral. In this way, there is both the history and current state of all deferral records.
This persisted state and historical reference negates the need to derive schedules at run time from previous totals, calculate amounts during recognition and reporting processes, and infer when historical events occurred such as when the batch was closed, when the record was created or had dates flipped, or what the schedule was or will be on a given date.
Note: This feature will be turned on by your BA or Support Analyst.
Advantages of the New Deferral Approach
While the new approach is a major change to how NetForum stores deferral transactions, it also comes with some significant benefits. The benefits of the new deferral process are listed below:
- More accurate reporting
- Enhanced capability for future reporting needs
- Improved reconciliation ability
- Better visibility for front-end users
- Data and processes can be thoroughly tested and verified
- Better maintainability
Persisted Deferral Schedules
In the new process there is a persisted schedule by which revenue associated with deferred invoice line items should be recognized. The schedules are stored in the deferral detail table and these schedule details are later offset by recognition records that correspond to the schedule record they are recognizing. A completed deferral should balance out to zero after summing the schedule and subtracting the sum of cancellation details and the sum of all recognition details. In a way, the deferral detail table acts as a kind ledger that must balance and allows for a clear historical picture of what has happened to the deferral over time.
Deferral Event History
In the new system, there is a deferral header record that can contain some setup or summary data. This is data that will not change as the deferral changes states. There is also a deferral details table that records when a deferral is opened, when the dates flip to begin the recognition cycle, when the batch closes, when recognitions, voids, or cancellations occur, and, finally, when the deferral is closed.
This detailed ledger gives a trouble-shooter a way to visually compare events on the deferral and determine where a problem could exist or where the user may have made incorrect assumptions about the expected state of the deferral. This critical to being able to understand such a complex process that happens over a long period time.
See Also
- Viewing Deferrals in iWeb
- Deferral Life Cycle
- Deferral Use Cases
- Generating a Deferral Revenue Recognized Report
- Generating a Deferral Revenue Available for Recognition Report