How to Use the Revenue Recognition Module in Dynamics 365 Finance and Operations

The Revenue Recognition module enables deferred revenue management within Dynamics 365 Finance and Operations. This walkthrough covers the end-to-end process from sales order creation to recognizing deferred revenue. For setup and configuration details, refer to the Microsoft documentation.

Creating a Sales Order with Revenue Schedules

On each sales order line, you can specify the revenue schedule using a dedicated drop-down field. Revenue schedules are user-configurable and determine when and how revenue will be recognised over time.

Once you confirm the sales order, the revenue recognition options become available from the Manage tab.

Expected Revenue Recognition Schedule

Looking at the Expected revenue recognition schedule, you can examine how much revenue should be recognised per the revenue schedule of that sales order line. For example, with a sales order line totalling $4,000 and a 12-month schedule, the Total recognizable amount field shows the revenue to be recognised at each occurrence — in this case $333.33 per month, recognised on the first of every month (with exception of the first month).

Invoicing and Deferred Revenue

When the sales order is invoiced, the system posts $4,000 in deferred revenue and $60 in deferred COGS.

Recognising Revenue

Once the invoice is posted, navigate to the revenue recognition schedule under Revenue Recognition > Periodic Tasks. From there you can recognise each occurrence of revenue.

1. Select the first occurrence of revenue ($333.33) and click Create journal for the system to generate the entry.
2. Choose to create the journal with the processing date as the revenue schedule date, using the As of date under the Recognize Revenue As Of section. This tells the system to recognise all deferred revenue for every sales order line as of this date — useful for recognising deferred revenue from prior months.
3. The system creates a unique revenue recognition journal found in the Journal entries section of the module. This journal automatically debits deferred revenue and credits the revenue account based on posting configuration. In this example, $333.33 is the planned amount, and $5 represents movement from deferred COGS to COGS (an optional setup depending on your sales order process).
4. Post the journal to officially complete the process of recognising the deferred revenue.

Source: How to Use the Revenue Recognition Module – Logan Consulting