How to Use Deferrals in Microsoft Dynamics NAV 2016

Hello and welcome to The Coffee Mug Tutorials. Today I wanted to go over Deferral Templates or Deferrals. There is a new feature in NAV or recent that allows you to do deferrals right off the bat on purchase invoices. Those are similar to - sort of - Accruals, but they are more related to depreciation than accruing. So I’m just going to jump in and show you how that works.

The issue that we have is that we get an invoice from a software company for service for the entire year, and we prepay that, but what I want to do is actually book that and have it automatically depreciated over 12 months.

So in order to do that I go here into something called Deferral Templates and I create a new one, call it ‘Consulting’. And the deferral account that I use for this is going to be Prepaid Services, so I have that here - Prepaid Software Contracts. I’m deferring 100%, number of periods is going to be 12, and those are months and that’s it.

So I also now want to receive the invoice from the company so I go into the Purchase Invoices and I create a new invoice to the consulting company that is the Mundersand Corporation and we’ll just do GL.

Here I actually want to pick the consulting services, so that’s a cost account: $60,000 and Quantity is just 1; Unit of Measure is ‘Each’; $25,000 and over here we see something called Deferral Quote. If I pick the Deferral Quote as Consulting then it should defer the expenses. So let’s see how that works.

I put in some random number here for the invoice, just for testing, and notice the amount is I think in Canadian dollars so it might not be exactly $25,000 booked - we’ll see how that goes. So I post it and I go into Posted Documents, into the Mundersand right here, and I hit Navigate.

So what I just did now even though I did quickly, I went into the Posted Document, Purchase Invoice, and I hit Navigate to see all the transactions that got created during the posting of this invoice.

And I see four GL entries and I click on that to take a look at what is happening and we see that we get $20,661 - that’s the $25,000 Canadian dollars converted into U.S. - a little show of currencies in NAV, but anyways. $22,400 is the vendor’s so that’s the liability account which is going to be for the entire invoice and then the $22,970 is completely offset and is an asset account.

Now I did not specify that, as you can see over here I specified the $64,200, but it threw it onto Prepaid Software Contracts because of the deferral template and at the same time for that month it is deferring or expensing out one-twelfth of this number which is $1320.04. So you see that you have one depreciation.

Now you might wonder is it going to automatically depreciate every single month after that until it’s done? And how is that going to happen because we don’t really have any service in place that automatically does this? No, it’s not that complicated. What it does, it actually posts everything through and the reason why we’re not seeing that in this number here is because we’re filtering on the document number and the date.

Now if we take away the date and look at all dates and hit Find, now we get 28 entries and now look at these 28. You can see that it’s perfectly dividing it out. Actually the $1320 is because we are on the 8th, and so it breaks that up into how many days are left of that month and then looks at full months and then it finishes out in the end 401. So it does it nicely.

And all of the entries are already booked, they are in there and on your GL, just on different dates, so remember to take away the date filter to see all the entries. And that’s pretty much it for the deferral schedule. You can use it on other things like Items and Resources; you can put them as default, but that should pretty easy to figure out once you get into it.