The recognition cadence, i.e. how often Flowrev recognizes amounts to the Income Statement (aka Profit and Loss) during the service duration, determines:
- the deferral (i.e. the transfer of amounts from an Income Statement Revenue account to a Balance Sheet Deferred Revenue account) and the frequency of subsequent recognition (i.e. the transfer back of amounts from a Balance Sheet Deferred Revenue account to an Income Statement Revenue account) when items or invoice lines are mapped to a revenue account for revenue. Or when items or bill lines are mapped to an expense account for costs.
- OR just the recognition when items are mapped to a current liability account for invoices, or current asset account for bills. In this case no deferral is needed.
The recognition cadence values are:
- Once - lets you defer the entire line amount on the invoice/bill date (if required) and recognize on a date in a different fiscal month than the month of the invoice/bill date.
- Monthly - lets you defer from the invoice/bill date (if required), and recognize amounts each month within the duration of the service contract. For example, if your service duration is one fiscal year, the system will recognize an amount to your Income Statement / PnL on the last day of each fiscal month within the year.
- Quarterly - lets you recognize an amount each quarter. For example, if your service duration is one fiscal year, the system will recognize an amount to your Income Statement / PnL only on the last day of each fiscal quarter within the year.
- Yearly - lets you do the same as Monthly, but with an annual cadence. For example, if your service duration is one fiscal year, the system will recognize an amount to your Income Statement / PnL only on the last day of the fiscal year.
- Custom - lets you create a custom schedule, including multiple sub-schedules for a transaction line.
- None - tells Flowrev that you do not want it to generate schedules for items so marked.
- Per Diem - Flowrev computes the recognition amount in each period proportionally to the number of days in that period.
E.g. a $1,200 invoice with a service period Jan 1, 2019 - Dec 31, 2019, a total of 365 days of service, Jan (and other 31-day months) will get (31 * $1200 / 365) , Feb will get (28 * $1200 / 365), and Apr (and other 30-day months) will get (30 * $1200 / 365) - Even Period - Flowrev will allocate the same amount to each period, with the below exceptions:
With Monthly, Even Period, for orgs connected on/after Feb 8, 2020, and if fiscal months are the same as calendar months, when the starting and/or ending months in the service period are partial, e.g. Apr 16, 2019 - Apr 15, 2020, Flowrev will compute the service duration in months, allocate the full month amount (= line amount/duration in months) to each full month and allocate a prorated month amount to the partial starting/ending month(s).
The system can also be configured to a) allocate $0 to the starting partial month and the full amount to ending partial month, or b) allocate the full amount to the starting partial month and $0 to the ending partial month. E.g. a $1,200 invoice with prorate will get $50 In Apr 2019 and Apr 2020 (same number of days in both partial months), and $100 in each month from May 2010 to Mar 2020.
For orgs connected before Feb 8, 2020 or when fiscal period is different from calendar period, Flowrev computes recognition evenly even if a specific period is shorter. For example, one day in a month is the same as 31 days in another for computing the recognition amount allocated. The system will compute the number of accounting periods spanned by the service dates, and each accounting period spanned will be allocated the same amount.
- Percent - Flowrev computes the recognition amount in each period based upon the percent allocated to that period. A 0% value will make the amount recognized in the schedule for that period be $0. For details, read this article.
- Balloon - Flowrev computes the recognition amount to be amortized in even periods for each period in the duration of the service subscription. But at end of the balloon period, if it is earlier than the service end date, the outstanding amount is recognized. Note: the default balloon period is 12 for Monthly, 4 for Quarterly and 1 for Yearly.