Overview
Deferred revenue involves revenue received before services or goods are delivered. Managing it manually means tracking each item, recognizing the right amount each month, posting journal entries, and reconciling the liability account every close.
This feature solves that by:
Automatically building month-by-month recognition schedules.
Creating reversal and monthly recognition entries.
Reconciling your GL balance with the schedule every month.
Allowing you to import existing deferred revenue schedules from your books.
Once enabled, you no longer need to prepare or maintain schedules manually. Xenett takes care of the entire flow.
Activate / Configure Deferred Revenue
The Deferred Revenue review point is part of the Accruals + AI add-on. You need to enable the add-on for the client before using this feature.
To add the review point:
Go to your Monthly Close or AI Finances Review plan.
Click New → Task (or Review Point in Finances Review).
Search for Deferred Revenue.
Add it to your checklist.
Before automation starts, configure:
Auto Entry Start Date — the date from which Xenett begins creating recognition entries. Can't be a future date.
Threshold — only transactions above this amount are processed. Defaults to 2,000.
Accrual Account — used for backdated scenarios where the service period has already started before the invoice date.
Default Deferred Revenue Account — the liability account where deferred amounts are posted.
QBO: Other Current Liabilities or Long Term Liabilities
Xero: Current Liability or Non-Current Liability
Account Mappings — map each Deferred Revenue GL to the Revenue GL accounts it should recognize into. The same revenue account can't be used in more than one mapping.
Show Previous Months — toggle on if you want the schedule to display months before the current period. Off by default.
Enable Auto Entry — when turned off, Xenett stops processing new transactions and pauses the Start Date, Threshold, and Accrual Account fields. On by default.
Click Activate & Start Entry to turn on automation.
Changes to the config apply to future transactions only. Existing schedules are not affected.
1. Viewing the Deferred Revenue Schedule
Inside the Deferred Revenue review point, the full schedule is organized by account group. Each group shows:
Customer Name — with revenue GL account, transaction date, and ref# below.
Amount — original transaction amount.
Period — duration (e.g., "12 Months") and full date range.
Recognized — total amount recognized to date.
Remaining Bal. — amount yet to be recognized.
Monthly columns — one column per month showing the per-month recognition amount.
At the bottom of each group, Opening Balance, Closing Balance, GL Balance, and Difference rows are shown for reconciliation.
All amounts use a thousands separator with 2 decimal places (e.g., 1,234.56). Zero amounts display as - and negative amounts appear in parentheses (e.g., (123.45)).
2. Automatic Entry Creation
When a qualifying transaction is saved in QuickBooks Online or Xero, Xenett automatically creates the reversal entry and all monthly recognition entries for the full schedule period.
What Xenett looks for
Xenett detects a transaction as deferred revenue when the memo contains a service period phrase, for example:
For the period 01/01/2025 to 03/31/2025
From 01/01/2025 - 03/31/2025
Where you write it determines what gets processed:
Transaction memo level — if the service period phrase is in the transaction-level memo, Xenett applies it to all lines of that transaction. For example, if a transaction has two lines, both lines are treated as deferred revenue for the same period.
Line description level — if the phrase is written at the individual line level, only that specific line is treated as deferred revenue. Other lines in the same transaction without the phrase are ignored.
Note: If the phrase exists at both levels, the transaction memo takes priority and applies to all lines.
Supported transaction types are Invoices, Sales Receipts, Deposits, and Journal Entries in QBO, and Invoices and Receive Money transactions in Xero.
What entries Xenett creates
A reversal entry on the invoice date — debits the revenue GL, credits the deferred revenue GL.
Monthly recognition entries on the last day of each month in the service period — debits the deferred revenue GL, credits the revenue GL.
If the invoice is dated after the service period has already started (backdated), Xenett also creates accrual entries for the past months before processing the reversal and future recognitions.
Each month's amount is prorated based on the number of days in that month. The total always equals the original transaction amount.
When a transaction is updated
Changes to amount, date, period, or GL account — Xenett deletes the existing schedule and rebuilds it from scratch.
Changes to customer, class, location, or tracking categories — Xenett updates the field without touching the schedule.
3. Bringing Existing Schedules Into Xenett
If you already have active deferred revenue schedules in your books:
Click Add Schedule in the review point header.
Fill in: Date, Customer Name, Deferred Revenue GL, Revenue GL, Amount, Start Date, End Date, and optionally Location / Class.
Click Prepare Schedule — Xenett calculates the month-by-month recognition amounts using daily proration.
Review the schedule. You can edit individual month amounts inline — the total must still equal the original amount.
Select only future months (past months are already recognized in your books).
Click Add Schedule to save and post entries for the selected months.
4. Exporting the Schedule
Click Export Excel in the review point header to download the full schedule. The file includes all account groups, entry rows, and summary rows with columns for Customer Name, Account, Date, Ref#, Amount, Start Date, End Date, Note, Recognized, Remaining Bal., and one column per month.
5. Balance Sheet View
All deferred revenue GL accounts appear in the Balance Sheet under Other Current Liabilities. The Finding column shows the reconciliation status for each account:
Reconciled — green checkmark. The GL balance matches the schedule for all months.
Discrepancy — red flag. The schedule and GL balance don't match for one or more months.
Not Configured — yellow warning. The account isn't linked to any Deferred Revenue review point.
Click any configured account (Reconciled or Discrepancy) to open a modal with the full recognition schedule — same layout as the review point. You can also add a manual schedule directly from this modal.
For accounts showing Not Configured, click Setup Config. A panel lists your available review points — click + next to the one you want to link this account to. The account is added to that review point's configuration automatically.
Summary
Once enabled, Deferred Revenue Automation lets you:
View and manage recognition schedules without maintaining them manually.
Import existing schedules mid-stream without duplication.
Reconcile your deferred revenue liability balance every close.