Problem
Users may expect that anytime a membership is cancelled, an invoice will generate. However, there are specific requirements for the membership to generate a cancellation invoice.
Solution
Here are things to check when a cancellation invoice was not created.
Ensure the membership doesn't have $0 deferred balance at the time of cancellation
Check whether or not a cancellation invoice has already been created
Verify recurring services are active and set up for deferred revenue
Ensure the membership is set up to use deferred revenue
Only memberships that are set to use deferred revenue generate a cancellation invoice at the time of cancellation.
Open the location record and from the left menu, click Memberships.
Select the membership. If you see a revenue recognition table, then the membership uses deferred revenue and can generate a cancellation invoice.
To look at a membership type:
Go to Settings > Invoicing > Membership Types.
Find the membership type and click Edit.
Navigate to the Billing > Revenue Recognition.
The membership type will have the checkbox for Deferred selected.
Note: If the membership is not deferred, it is not expected to generate a cancellation invoice.
Ensure the membership doesn't have $0 deferred balance at the time of cancellation
Open the location record and from the left menu, click Memberships.
Select the membership and scroll down to the Revenue recognition table.
Check the Deferred Balance column.
Compare the cancellation date seen in the Membership Status History table with the Deferred Balance as of that date.
Note: The goal of the cancellation invoice is to make the deferred balance $0. If this is already the case, a cancellation invoice will not be generated.
Check whether or not a cancellation invoice has already been created
Only one cancellation invoice is created per membership. If you cancel, reactivate, and cancel the membership again, no second cancellation invoice is generated.
Open the location record and from the left menu, click Memberships.
Select the membership you want.
Check the Membership Status History table for duplicate instances of cancellation.
If you notice multiple instances where the status of the membership was changed from Active to Canceled, compare the date of the cancel action to the date of the Cancellation Balance line in the Revenue recognition table.
Note: If a cancellation invoice was generated during the initial cancellation, the date of the Cancellation Balance line matches the date of the initial cancel action shown in the Membership Status History table.
Check the membership's initial deferred revenue
Open the location record and from the left menu, click Memberships.
Select the membership you want and click edit.
Scroll down and check the Initial Deferred Revenue field. If the remaining deferred balance equals the initial deferred revenue, a cancellation invoice will not be generated. This happens because there is no GL account associated with the Initial Deferred Revenue field.
Verify recurring services are active and set up for deferred revenue
Open the location record and from the left menu, click Memberships.
Select the membership you want to review.
In the membership details, verify that the Recurring Service is active and present.
Click the Recurring Service.
From the Recurring Service screen that opens, find the Invoice Template and click Edit. Check that the invoice template is correctly configured to recognize deferred revenue. If needed, add both the positive-dollar and negative-dollar service items associated with the correct GL accounts from your Pricebook to the invoice template to ensure proper revenue recognition. For more, see Configure invoice templates for deferred revenue.
