Reconciliation - Automatically allocate Subscription Sales into Unearned Income and Earned Income based on timing
Allow front-loaded revenue (such as annual subscriptions or project fees) to be automatically allocated to Unearned Income (i.e. a liability) and then gradually transferred to earned Subscription Sales Revenue.
As a small business owner which sells hundreds of annual subscriptions to our service (different price packages and different start dates for each customer), it would be really handy to know how much of that received money has been 'earned' and how much remains 'Unearned Income'. On Day-1, 100% of it is unearned income (and would need to be refunded if we close as a business), on Day-183, 50% is in Unearned Income and 50% is in earned subscriptions income; thru to Day-365 whereby all of it has transitioned from Unearned Income into earned Subscription Sales income.
Manual Journals can be used at EOFY to properly show this unearned income liability, but then the Year To Date figures make no sense. It would be much better if this calc could be automatically done each day. The Manual Journals allow for auto-repeated journals, but only for the exact same amount (i.e. $xx) and on the same dates. Allowing a percentage amount of the original total (i.e. X%) to be shifted across each day (or each month), would be helpful. Presumably the underlying Xero code development to allow this functionality would be pretty simple as well.
Such a feature could also be very useful for front-loaded fees for consulting projects, and/or front-loaded annual expenses such as insurance (which is technically a pre-paid asset on Day-1 but transforms into a fully incurred expense by Day-365).
It might sound niche, but any business which has annual subscription sales as a bulk of their revenue will find this feature very useful!!
Cheers
Damon
Damon Grace
shared this idea
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