Overview

Deferred Accounting allows expenses to be recognized over a service period instead of being fully expensed on the Purchase Invoice date.

When a Purchase Invoice is processed using Deferred Accounting, the system automatically creates Journal Entries that distribute the expense across the specified service period.

Example

A software subscription purchased on 1 April for a 3-month service period (April–June) can be recognized as:

• April Expense

• May Expense

• June Expense

instead of recording the full amount in April.

Prerequisites

Before using Deferred Accounting, ensure the feature is enabled.

Enable Deferred Accounting

1. Navigate to Accounting Settings.

2. Enable Deferred Accounting.

3. Save the settings.

Configure Deferred Expense on an Item

Deferred Accounting is configured at the Item level so that it is automatically available when creating Purchase Invoices.

Step 1: Open the Item

1. Go to Stock > Items.

2. Open the item that represents the service or prepaid expense.

Step 2: Enable Deferred Expense

1. Enable Deferred Expense.

2. Select the Default Expense Account.

3. Optionally enter the default service duration (number of months).

Note: The number of months is optional. The actual service period can be specified directly on the Purchase Invoice.

Example Configuration

Create a Purchase Invoice

After configuring the Item, create the Purchase Invoice as usual.

Required Information

For each deferred expense item:

1. Select the Item.

2. Enter the Service Start Date.

3. Enter the Service End Date.

Example

The expense account will automatically populate based on the Item configuration.

Save and Submit the Purchase Invoice.

Create a Deferred Accounting Process

Once the Purchase Invoice has been submitted, a Deferred Accounting Process must be created.

Step 1: Create a New Process

1. Navigate to Deferred Accounting.

2. Click Add Deferred Accounting Process.

3. Set:

Step 2: Verify Dates

Ensure the following dates match the service period defined on the Purchase Invoice:

• Service Start Date

• Service End Date

Example

Step 3: Save and Submit

1. Click Save.

2. Click Submit.

The system will generate the required Journal Entries for the service period.

Processing Multiple Purchase Invoices

If multiple Purchase Invoices require Deferred Accounting:

Correct Process

1. Create and submit the first Purchase Invoice.

2. Create and submit the Deferred Accounting Process for that invoice.

3. Verify the generated Journal Entries.

4. Proceed to the next Purchase Invoice.

5. Repeat the process for each invoice.

Important: Process Deferred Accounting one invoice at a time. Do not create multiple Purchase Invoices first and then attempt to process them together.

Generated Journal Entries

After the Deferred Accounting Process is submitted, the system automatically creates Journal Entries for each accounting period.

Each Journal Entry represents the portion of the expense recognized for that month.

Journal Entry Review and Submission

By default, generated Journal Entries are created in Draft status.

Manual Submission

1. Open each generated Journal Entry.

2. Review the accounting entries.

3. Click Save and Submit.

This allows the finance team to review the postings before they affect the General Ledger.

Auto Submit Option

An Auto Submit option is available.

When enabled:

• Journal Entries are automatically submitted after creation.

When disabled:

• Journal Entries remain in Draft status until manually reviewed and submitted.

Most organizations prefer to keep Auto Submit disabled so that Finance can review the entries before posting.

Example Workflow

flowchart TD

A[Enable Deferred Accounting]
--> B[Configure Item with Deferred Expense]

B --> C[Create Purchase Invoice]

C --> D[Enter Service Start Date]
C --> E[Enter Service End Date]

D --> F[Submit Purchase Invoice]
E --> F

F --> G[Create Deferred Accounting Process]

G --> H[Save & Submit Process]

H --> I[System Generates Monthly Journal Entries]

I --> J[Review Journal Entries]

J --> K[Submit Journal Entries]

Best Practices

Verify Item Configuration

Always confirm that:

• Deferred Expense is enabled.

• The correct Default Expense Account is selected.

Process Invoices Individually

When handling multiple Purchase Invoices:

• Complete Deferred Accounting for one invoice before starting the next.

• Verify the generated Journal Entries before proceeding.

Review Journal Entries Before Posting

Unless your organization requires full automation:

• Keep Auto Submit disabled.

• Review each Journal Entry before submission.

Verify Service Dates

Incorrect service dates will result in expenses being recognized in the wrong accounting periods.

Always confirm the following are aligned before submitting the process:

• Service Start Date

• Service End Date

• Deferred Accounting Process dates