Deferred Revenue

Deferred Revenue is a Sundry Charge option that separates income a guest has already consumed from income that has been posted in advance for a future period.

Overview

When a Repeat Charge posts before the period it covers, the full amount lands on the reservation account immediately even though part of it relates to nights the guest has not yet stayed. Deferred Revenue marks that Sundry Charge so RMS can split the posted amount into the portion already earned and the portion still owed to the guest as future accommodation.

Use Deferred Revenue on properties running Long Term Reservations on a monthly or quarterly billing cycle, where charges are posted days or weeks ahead of the billing period starting. Finance teams use the split for revenue recognition, month-end close, accruals and audit support. Property managers use it to see how much of what has been posted on a long-stay booking is genuinely earned.

Deferred Revenue affects reporting and revenue recognition only. It does not change the amount charged to the guest, the invoice, or the account balance.

Please Note! RMS is highly configurable. Some Terminology, User Access & Permissions, Images, Labels, and Functions used in these articles may differ from your setup. CLICK HERE to find out more.

Availability

The Deferred Revenue option appears on every Sundry Charge and can be set by any user with access to Setup.

The reporting that consumes Deferred Revenue is restricted. The Cumulative Deferred Rental Report is a custom report that RMS enables for specific properties. It does not appear under Reports > Accounting unless it has been enabled for your property. Contact RMS Support to find out whether your property has access.

Prerequisites

Two things must be true before the deferred split is visible:

The Sundry Charge with Deferred Revenue ticked is used by a Repeat Charge. Deferred Revenue has no effect on charges posted any other way.
The Cumulative Deferred Rental Report is enabled for the property.

How Deferred Revenue Works

Key terms

Billing period - the date range a Repeat Charge covers, for example 1 March to 31 March.
Consumed - the days in the billing period that fall on or before the reporting date. Revenue for these days is treated as actual.
Deferred - the days in the billing period that fall after the reporting date. Revenue for these days has been posted but not yet earned.
As of Date - the date the split is measured against, usually the last day of the accounting month.

What Gets Deferred

Only Repeat Charges posted from a Sundry Charge that has Deferred Revenue ticked are split into consumed and deferred amounts. Everything else is treated as earned when it posts:

Repeat Charges from a Sundry Charge that does not have Deferred Revenue ticked.
Periodic Charges, which are excluded from the deferred revenue calculation entirely.
One-off Sundry Charges, accommodation tariff and receipts.

Please Note! A Repeat Charge that is posted and consumed entirely within the same billing period produces no deferred amount, because there are no unconsumed days left at the reporting date.

How the split is calculated

For each billing period, RMS compares the number of days in the period against the number of days consumed at the As of Date. The chargeable amount is then apportioned across those two groups, and the same apportionment is applied separately to rent, service charge and tax so each component can be reported on its own.

Where the charge has been invoiced, the calculation uses the invoice date rather than the posting date. A cancelled tax invoice is reported as a negative value across every column so the reversal nets off against the original.

Example

A tenant is billed monthly in advance. The Repeat Charge for the period 1 April to 30 April posts on 20 March for 3,000 in rent across 30 days.

Reporting as of 31 March, none of the period has been consumed, so the full 3,000 is deferred. Reporting as of 15 April, 15 of the 30 days have been consumed, so 1,500 is reported as actual and 1,500 remains deferred. Reporting as of 30 April, the whole 3,000 is actual and nothing is deferred.

Set the Deferred Revenue option on a Sundry Charge

In the side menu of RMS, go to Setup > Accounting > Sundry.
Select the Sundry Charge used for the Repeat Charge, then select Edit.
On the Sundry tab, tick Deferred Revenue in the Options panel.
Select Save.

Please Note! Setup > Accounting is labelled Sundry on some databases and Extras on others. Both labels open the same screen.

Tip! The DeferredRevenue column in the Sundry Charges import file sets the same option, so it can be applied in bulk rather than one record at a time.

Cumulative Deferred Rental Report

The Cumulative Deferred Rental Report is where the deferred split is reported. It lists every account holding an active Repeat Charge from a Sundry Charge marked as Deferred Revenue, and breaks each billing period into what has been consumed and what remains deferred.

Go to Reports > Accounting > Cumulative Deferred Rental, set the parameters, then select Build. The report can be built for a past date as well as the current date, and the output can be exported to CSV.

Report Options

Parameter	Description
As of Date	The date the consumed against deferred split is measured at. Usually the last day of the accounting month.
Property	The property or properties to report on.

Report columns

Column	Description
Billing Period Start Date	The first day of the billing cycle the charge applies to.
Billing Period End Date	The last day of that billing cycle.
Chargeables	The total chargeable for the billing period, split into Rental, Service Charge, Tax and Total.
No. of Days in Billing Period	The number of days the billing period covers.
No. of Days Consumed in Current Billing Period	The days the guest has already stayed within the billing period at the As of Date.
No. of Days Deferred in Current Billing Period	The days not yet consumed at the As of Date, where the charge has already been posted.
Actual Posted	The posted charges covering consumed days, split into Rental, Service Charge, Tax and Total.
Deferred	The posted charges covering days not yet consumed, split into Rental, Service Charge, Tax and Total.
Unbilled Advance Rental, Service Charge and Tax	Future revenue in the billing period that has not been posted yet. Normally zero.
Unbilled Actual Rental, Service Charge and Tax	Past-dated revenue in the billing period that has not been posted yet. Normally zero.
Total Revenue, Service Charge, Tax Expected	The total chargeable for the billing period. Matches the Chargeables total.
Difference	All Actual plus all Deferred, less Total Expected. Should be zero.

Reading the output

Work from the Difference column first. It should be zero on every row. A non-zero value means the posted charges do not reconcile to the amount expected for that billing period, and the account needs investigating before the figures are used for month-end.

The Unbilled columns should also normally be zero. A value here means part of the billing period has not been posted at all, which usually points to a Repeat Charge that has stopped posting or has been voided.

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