Set up deferred revenue for membership types

Overview

If you use deferred revenue in your accounting, set up your membership types so that revenue is automatically recognized as income whenever you provide recurring service events included with a membership.

Things to know

• Before you configure a membership type, make sure you set up deferred revenue.
  

Configure deferred revenue for a membership type

To configure deferred revenue settings for a membership type, edit the membership type:

1. Click SAVE & NEXT until you reach the Revenue Recognition screen of the RECURRENCES section.

2. For Is the membership revenue recognized at the point of sale or deferred?, select Deferred.
   

3. Select whether you want deferred revenue calculated for each recurring service event automatically or manually.

   • No, I will calculate manually: Use the deferred revenue values in the invoice template of the recurring service type.

   • Yes, calculate automatically: Use the Memberships Wizard to calculate deferred revenue for each recurring service type.
     If you select Yes, calculate automatically, select if you want to divide revenue evenly between recurring service events.

     Note: Any recurring revenue values in the invoice templates of recurring service types attached to the membership type are overwritten by the values calculated by the Memberships Wizard.

     • Yes: The Wizard assigns an equal percentage of the membership price to each recurring service event.
       For example, if a $500 membership includes four water filter replacements and four water quality tests, the Wizard allocates revenue as follows:
       $500 membership fee / 8 recurring service events = $62.50/recurring service event

     • No: Manually assign percentages to allocate for each included recurring service type. Make sure that the total equals 100%.
       For example, using the previous example membership, you assign 80% to water filter replacements and 20% for water testing, the Wizard allocates revenue as follows:
       Water filter replacement $500 membership fee * 80% allocation / 4 recurring service events = $100/water filter replacement
       Water testing $500 membership fee * 20% allocation / 4 recurring service events = $25/water quality test
       

4. Under How do you want to recognize deferred revenue when you dismiss a recurring service event?, select what happens when a recurring service event is dismissed:

   • Always recognize revenue when dismissing a recurring service event: When a recurring service event is dismissed, deferred revenue is automatically recognized

   • Give the option to recognize revenue when dismissing a recurring service event: When a recurring service event is dismissed, a notification appears asking if deferred revenue should be recognized or not

     Note: Dismissing a recurring service event without recognizing deferred revenue can result in incorrect revenue reporting.

     

5. Under If a canceled membership has a deferred balance remaining, how do you want to resolve the difference with customers?, select how you want to handle a deferred revenue balance for a canceled membership:

   • Always create a charge/refund invoice: A charge/refund invoice is automatically generated for the balance of deferred revenue

   • Option to create a charge/refund invoice: You have the option to create a charge/refund invoice for the remaining balance

   • Do not create a charge/refund invoice: You do not have the option to create a charge/refund invoice.
     

6. When you’re done, click SAVE & NEXT.

Want to learn more?

• Visit ServiceTitan Academy and enroll in Deferred Revenue Memberships

• See Customer Memberships report template

• See Create membership types