To help people on-board and seamlessly adopt Flowrev, Flowrev allows service start dates even prior to a period lock date, and schedule generation in periods that may be locked in the accounting system. This gives users the ability to generate accurate recognition schedules utilizing the proper service contract dates.
For guidance on how to formulate a transition strategy see this article.
If a user syncs a schedule for a month that is locked in Xero, Flowrev will enter a DRAFT journal entry, which the user can approve within their accounting system. All journals for dates after the period lock date will be entered as "POSTED".
After on-boarding, the Xero org can be set to have a "Hard" period lock date. Contact support to have the hard period lock set for your entity.
With it set, the system will ensure that no dates earlier than the current value of period lock date are set during schedule creation or schedule cancel.
Important: Before creating or canceling schedules, always run "Update Selected" from the Org > Change/Update page, with "Organisation" selected to ensure Flowrev has the current value of period lock date consistent with Xero.
For example if period lock date is Apr 30, 2018, hard period lock is set, and the user specifies a service date of Mar 1, 2018 - Jun 30, 2018, then Flowrev will automatically move the March and April recognition on the schedule to May 1, 2018 (i.e. one day after period lock date).
And with the above setup, schedule deferrals, if any, e.g for an invoice raised in April with a revenue class mapped line, will also be redated to May 1, 2018. To prevent the system from analyzing transactions dated before May 1, 2018 for schedule creation when Generate Revenue Schedule is run on the Revenue page, also set the transition date in the org settings to May 1, 2018.
It is important to evaluate the implications to monthly revenue (or costs) of implementing hard period locks. On an accrual basis, in the above example, the original journal in Xero ( Dr A/R 457.67 Cr Sales 457.67 ) occurs on April 4, 2018 - the invoice date. The PnL shows it as revenue in the Sales account in April. The deferral ( Dr Sales 457.67 Cr Deferred Revenue 457.67 ), happens in May. And three months of recognition (Dr Deferred Revenue 345.12 Cr Sales 345.12) also happens in May, with the associated effects on revenue in May.
To avoid the schedule deferral "movement" across months as in above example, map the invoice line directly to deferred revenue. The schedule will only have a zero deferral element - with no affect on revenue.