Odoo handles deferred revenue, also known as unearned revenue, which is money received from customers upfront for goods or services that haven’t been delivered yet. Since the company still owes the customer those products or services, this advance payment is considered a liability.
Here’s a breakdown of deferred revenue in Odoo:
Concept:
Deferred revenue is recorded as a current liability on the company’s balance sheet until it’s recognized as income.
It cannot be reported as current income on the Profit and Loss statement because it hasn’t been earned yet.
Odoo’s Management:
Odoo allows you to create and view deferred revenue entries.
You can define a deferred revenue model that specifies how the income will be recognized over time. This could be a one-time recognition or spread out over a period.
Odoo offers two ways to generate deferral entries:
Automatic: By default, Odoo automatically creates draft entries when you post a customer invoice with deferred revenue.
Manual: You can choose to generate entries manually at the end of each period (e.g., month) for grouped amounts.
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