What's the reason for dividing deferred revenue by the amount set up for recurrence, and how does it work for memberships that last different times and happen at different intervals?

Problem

Users may find that deferred revenue for some memberships is calculated differently. This issue arises when the recurrence of service events is set differently for each membership type, such as monthly with a continuous duration, instead of the standard annual recurrence.

Solution

Understand deferred revenue calculation

Deferred revenue starts with the total sale price of the membership. The length of the membership and the number of recurring service events determine how revenue is recognized.

For example, if a membership price is $120 and the recurrence is set for 12 months with 4 recurring service events, divide $120 by 4. You get $30 per service event.

Understand continuous duration

A Continuous duration means services will recur indefinitely at the set interval. Ensure the recurrence interval matches the expected frequency of service events for continuous memberships.

Identify the recurring services' setup

Check what the membership types' Recurring Service recurrence is set to and the duration type.

1. Go to the navigation bar and click Settings > Invoicing > Membership Types.

2. Edit the membership type that you want to check.

3. Under Step 2, click the Recurrences dropdown, then select Add Recurring Services.

4. Click Edit Existing Service.

5. Check what the Recurrence Type and Duration Type set is for each recurring service added to the membership type.

Fix deferred revenue calculation

1. Go to the membership details page in ServiceTitan.

2. Find the membership with the incorrect deferred revenue calculation.

3. Edit the membership settings. Change the recurrence interval to match the intended service frequency.        

   Note: If the membership is intended for annual service events, set the recurrence to 12 months.

4. Adjust any related invoice templates to reflect the correct revenue recognition amount.

Adjust individual memberships

1. If a customer membership was set up incorrectly, navigate to the specific invoice linked to the membership.

2. Manually edit the tasks related to deferred revenue. For example, change tasks from +49.83 and -49.83 to +299 and -299 to correct the revenue amount.

3. Confirm the changes to ensure the deferred revenue is now calculated correctly.

By following these steps, you can correct and understand the logic behind deferred revenue calculations for memberships with various durations and recurrences in ServiceTitan.