How do I recognise / defer revenue in Synergist?
Synergist has a revenue management interface. It should only be enabled after discussion with your dealer as it will have an impact on how all sales invoices are produced, and user training may be required. In order to switch this feature on go to tools & settings > company settings > double click into a company > open the codes tab and check the box "allow revenue recognition".
This opens access to the revenue management interface under clients & jobs, and changes the appearance of the phase allocations page on sales invoices.
Revenue management is a process whereby you adjust the amount of income you report in your accounts system. This is done in two ways, recognising revenue not yet billed, and deferring revenue already billed.
The revenue management interface can be used to give an overview of all jobs, and their revenue deferral status. This interface can also be used to create new deferral / recognition documents (called RR’s). RR’s can be created with a positive or negative value to recognise or defer revenue. As such there is no concept of invoice / credit RR’s.
Recognise revenue not yet billed:
Raise a RR, either from the revenue management interface, or from the financial page of a job / phase, and enter the amount to be recognised on the phase allocations page. This amount will continue to be recognised on this job at each month end, until it is adjusted by additional RR’s. When the real invoice is raised you may choose to reverse any recognised balance. Alternatively you may simply recognise the invoice in full, then reverse the recognised balance subsequently with a negative RR.
Defer revenue already billed:
Raise a new sales invoice as normal, and enter the amount of the invoice to recognise on the phase allocations page. This will create a deferral on this job / phase, which will continue to be deferred each month until it is adjusted by other RR’s. Eventually the invoice will be recognised in full at which point either further sales invoices should be raised, or if the job is now complete it should be written off.
Whether you recognise turnover or profit determines (or is determined by) whether or not you use the cost tick-off mechanism used by Synergist to facilitate profit reporting, wip reporting and purchase accrual reporting. The decision to use one method or the other may be driven by the process used internally to arrive at a recognition value invoice by invoice. Recognising turnover is more in keeping with the way other parts of Synergist operate, but sometimes it is easier to decide on a profit figure to take to your balance sheet than a turnover figure. Note that you cannot mix the two approaches, all jobs must be recognised in the same manner. Whichever approach is used the revenue management screen will be used to produce a report at month end to be used as a deferred revenue journal, which will then be entered into your accounts manually.
The amount recognised on sales invoices and RRs is a turnover value. This is the normal approach, and is the method that is used if you tick costs off against sales invoices and use Synergist to generate a purchase accrual journal. Your WIP balance will reduce as costs are ticked off, and the deferred amount will be reduced accordingly as you recognise more of your sales invoice total. Purchase orders will be accrued for as they are ticked off (until the purchase invoice is received) to offset the amount recognised relating to these purchase costs.
The amount recognised on sales invoices and RRs is a profit value. When using this approach it is essential that no costs are ticked off against sales invoices or RRs until the final, closing transaction. All costs on the job must be ticked off against this closing transaction. All costs will remain in WIP until the job is closed to offset the larger deferral value (only profit is recognised). No purchase orders will be accrued for until the job is closed as there has been no recognition made relating to costs, only profit. However, once a job is closed (and all costs ticked off), if any purchase orders have still not been supplier invoiced they will be accrued for as normal, as the recognition value on the job must equate to the total invoiced amount – this is a requirement for closing a job.