SB515 – Deferral Schedule Generation and Journal Entry Posting in D365 Subscription Billing

🌐 Introduction

Welcome to SB515, the next article in our Revenue & Expense Deferral series for Subscription Billing in D365 Finance.

In SB514, we configured the system with templates, defaults, and setup rules for revenue deferral. Now, it’s time to walk through what happens next: how deferral schedules are generated, where they live, and how the system posts monthly revenue to the general ledger.

Whether you use straight-line recognition or milestone-based triggers, this post shows exactly how D365 turns configuration into compliant accounting automation.

🔁 What Triggers a Deferral Schedule?

A deferral schedule is automatically created in D365 when a transaction involving a deferrable item is invoiced.

✅ D365 checks the item, template, and setup rules to create the schedule and defer the income.

🧾 Example: Straight-Line Schedule Generation

Scenario:

• Item: SBX-RNW-ANN1
• Invoice Amount: £600
• Deferral Template: 12 periods (monthly)
• Start Date: 01-Apr-2025

System Creates:

Total Deferred: £600

GL Posting (at invoice):

• DR: Accounts Receivable £600
• CR: Deferred Revenue £600

📍 Where to View Deferral Schedules

📍 Path: Revenue and expense deferrals > Deferral schedules > All deferral schedules

This page shows:

• Schedule line ID
• Total deferred amount
• Recognition frequency
• GL accounts
• Posting status by period

🔍 Filter by “Not posted” to review schedules before running recognition jobs.

📤 Posting Revenue Recognition Journals

There are two ways to post journals:

✅ Journal Posting Example (April Recognition)

For SBX-RNW-ANN1, if recognition is posted for April:

Posted to journal name: REVDEF

Posting date: Based on system date or cutoff override

🔁 Event-Based Recognition Example

Scenario:

• Item: SBX-MILET-01
• Total Value: £5,000
• Event 1 = 70% | Event 2 = 30%

Workflow:

1. Create Schedule > ensure event-based template attached > Generate invoice

2. Deferral generates two deferrals for £3,500 and £1,500

3. Recognise events once completed (Use Modio

4. Deferral journal posted for earned revenue

🧠 Milestone schedules must be manually advanced based on project or delivery status.

🔄 Reversals, Adjustments & Catch-Ups

✅ These features are controlled via deferral parameters (see SB514).

✅ Summary

Once a deferral-enabled invoice is posted, D365 handles everything else—from generating the recognition schedule to posting monthly journals. You get full traceability and financial compliance, with minimal manual effort.

🔜 Coming Up Next: SB516 – Handling Short-Term and Long-Term Deferred Revenue

In SB516, we’ll explore how D365 separates short-term and long-term deferred balances using rolling periods or fixed year-end logic. We’ll also cover:

• Balance sheet impact
• Reclassification reporting
• Use case: Multi-year SaaS contracts

Expand Your Knowledge: See More Subscription Billing Blogs