This is what happens in the video
If you work with Business Central, you can spread income and costs across multiple periods using deferral templates. Once you have set up a deferral template, you can apply deferrals directly on general journals, purchase invoices, and sales invoices. This lets you post an amount once and have the system automatically distribute it across the periods you define.
You apply a deferral by selecting a deferral code on the journal line or document line. The system then moves the amount out of the income statement account and into a deferral account, releasing small amounts to the income statement account across each period.
You can adjust the deferral schedule directly before posting. You can change the start date, the amount to defer, the number of periods, and whether the calculation uses days per period. This is useful when you only want to defer part of an amount or start in the middle of a month.
To verify your deferrals before posting, use the preview posting on a journal, or open the posted document and use the navigate function. Be aware that the entries view applies a filter on the posting date, so you may only see one period’s deferrals unless you remove that filter.
Setting up deferrals on a general journal
Once you have your deferral templates in place, the general journal includes a column called deferral code. Say you buy phones and telephones for 5,000 including VAT, with your bank account as the balancing account because you pay directly. If you want to defer this amount across a year, you select your 12-period straight-line deferral template in the deferral code column.
For this to work, you need the year opened 12 periods ahead. If those periods are not open, you get an error saying it is not possible to defer further than the period you have defined.
After selecting the template, you can open the three dots to see exactly what will happen with the deferral amounts. You can change the schedule here as well. If you want to start in the middle of the month, you set that and recalculate the schedule, which then defers in a different way. You can also adjust the amount if you only want to defer part of it, and you can change settings such as days per period or the number of periods, for example down to 10 periods.
Normally you just select the template you have already made, but if you need to make changes, you do it directly in this view.
Previewing the entries before posting
Before posting the journal, you can preview the posting to see which entries will be created when the deferral is set up. In the phone example, you see the income statement account, the 4000 account, with 3000 taken out of it and moved into the deferral account. Across each period in your deferral schedule, the system then transfers small amounts to that account. At the end you also see your bank account under the vendor account. Once everything looks correct, you post directly from here.
Setting up deferrals on a purchase invoice
You can do the same on a purchase invoice. Create a new purchase invoice for your vendor and buy directly on a G/L account, for example the same phone account, for 4,000 without VAT.
If you scroll right and have added the deferral code field to the page, you select the deferral code from the same list of codes. After selecting it, you go into the line related information and open the deferral schedule. You see the same view as in the general journal, showing how the deferral schedule looks, and you can adjust it before posting. You do need a vendor invoice number for the invoice to be posted.
Setting up deferrals on a sales invoice with items
You can also use deferrals on a sales invoice, and this works with items as well, not just G/L accounts. Create a new sales invoice to a customer, for example Bike Master in Atlanta, and sell two bikes.
If you have added the deferral template field to the sales line, you select a deferral code, for example a six-period template, and post the invoice.
To check the result, open the posted invoice and navigate it to confirm the six periods look correct. Go into actions and select navigate. In this example you see only 10 G/L entries because there is a filter on the posting date, set to the 15th of April, so you only see the April deferrals. If you remove the posting date filter but keep the document number, you see all the other deferrals.
One note on the setup: in a sales scenario, the deferral account should be an income account rather than an expense account.
Q&A
On which documents can you apply deferrals in Business Central?
You can apply deferrals directly on general journals, purchase invoices, and sales invoices once you have set up deferral templates. Deferrals work with both G/L accounts and items.
Why do you get an error when applying a 12-period deferral?
You need the year opened 12 periods ahead. If those periods are not open, you get an error saying it is not possible to defer further than the period you have defined.
Can you change the deferral schedule before posting?
Yes. You can change the start date, defer part of the amount, adjust the number of periods, and switch to days per period. You open the deferral schedule from the line and recalculate before posting.
Why do you only see one period’s deferrals when navigating a posted invoice?
The entries view applies a filter on the posting date. Remove the posting date filter while keeping the document number to see all the deferrals across every period.
What account should the deferral use on a sales invoice?
On a sales invoice, the deferral account should be an income account rather than an expense account.