Set up deferred revenueLast updated on 09/07/2022

• The Memberships Wizard helps automatically calculate deferred revenue for a membership type. You can also configure deferred revenue manually.

• You can manually edit deferred revenue for an individual customer’s membership without affecting the membership type settings.

• Use the Customer Memberships report template to track deferred revenue.

Deferred revenue is used in accrual accounting to manage advanced payment for upcoming services. After accepting payment, you only recognize it as income upon delivery of services, when the revenue is earned. Memberships use deferred revenue to account for recurring services included with a membership.

For example, for an annual membership fee of $200, customers receive quarterly air filter changes. With deferred revenue:

• The upfront membership fee of $200 is deferred in a General Ledger (GL) liability account.

• For each quarterly filter change, the invoice debits $50 from the liability account and recognizes $50 in the income account.

With deferred revenue, for sold memberships, recurring service event invoices are prefilled for your technicians and recurring revenue is automatically accounted for in your GL account.

Follow these steps to set up deferred revenue:

Step 1. Set up your General Ledger accounts

Set up a GL liability account for deferred membership revenue and a GL income account for recognized membership revenue in QuickBooks:

• Set up GL accounts in QuickBooks Desktop

• Set up GL accounts in QuickBooks Online

You can also map membership-related service items in your pricebook to Item GL Groups in Intacct:

• Map Pricebook items to Intacct Item GL groups

Step 2. Create Pricebook service items for deferred revenue

These Pricebook service items appear on invoices for recurring service events. One item debits deferred revenue from the GL liability account, the other credits the revenue in the GL income account. Follow these steps"

• Create pricebook service items for deferred revenue

Step 3. Configure invoice templates for deferred revenue

Invoice templates are used to generate invoices for recurring service events. Set up invoice templates with the deferred revenue billing items from your pricebook:

• Configure invoice templates for deferred revenue

Step 4. Configure recurring service types for deferred revenue

Recurring services included with a membership are based on a recurring service type. Follow the steps to set up a recurring service type for deferred revenue:

• Configure recurring service types for deferred revenue

Step 5. Set up deferred revenue for membership types

Set up a membership type to include a deferred revenue recurring service type. You can also configure the membership type to automatically calculate deferred revenue for each recurring service event:

• Set up deferred revenue for membership types

• Visit ServiceTitan Academy and enroll in Deferred Revenue Membership Programs

• See Customer Memberships report