How do I activate deferred income (passive accruals) in my software?

In this article, you will learn how to activate deferred income (passive accruals) in your software, set the interval, and use the bookings and reports for your accounting.

Contents

• What is deferred income (passive accruals) in the software?
• Requirements & Accounts
• Activating deferred income (passive accruals)
• Choosing the interval for deferred income
• How the booking logic works (practical examples)
• Exporting reports in the accountant portal

Fast Lane

• Check if you have the correct account for deferred income (PRA) set up in your accounting configuration.
• Open the accounting configuration of your software and activate the option for deferred income.
• In the field Deferred income interval, specify whether you want to accrue monthly or annually.
• Save the settings – from now on, the appropriate bookings will automatically be included in the regular accounting exports.
• In the accountant portal, access the reports for deferred income and export them if needed as a summarized studio report or a detailed export.

What is deferred income (passive accruals) in the software?

Deferred income (short: PRA) ensures that revenues you receive in advance are allocated exactly to the period in which your service is provided. A typical example: membership fees paid for an entire year at once that cover the service period of the year.

Instead of booking everything directly as revenue, the amount is first posted to a deferred income account and then – depending on the chosen interval – transferred monthly or annually into revenue. The software creates these bookings automatically and includes them directly in your accounting exports (e.g., DATEV, SAP, etc.).

Requirements & Accounts

For the function to work properly, you need an account for deferred income in your chart of accounts. By default, the following accounts are set up. During activation, you can specify a specific accounting account number:

• SKR 03: Account 0990 – Deferred income interval / Accrual interval
• SKR 04: Account 3900
• HGB/GAAP: Account 2020
• IFRS: Account 2020

Make sure the account you need is configured in your software’s accounting configuration. Your accountant can tell you which account you should specifically use.

Activating deferred income (passive accruals)

Once the account is set up, you can activate the function in your software. Activation is controlled via a dedicated option in the accounting configuration.

1. Open the accounting settings of your software (e.g., in the accountant or accounting area).
2. Search for the setting for deferred income, e.g., Activation of accounting accrual based on the underlying booking period.
3. Check the box to activate the function.
4. Verify that the correct PRA account is assigned.
5. Save your changes.

From this point on, the software automatically generates bookings for deferred income and includes them in your regular accounting exports.

Choosing the interval for deferred income

After activation, you specify the rhythm in which the revenues should be recognized. There is a field in the accounting configuration called Deferred income interval / Accrual interval.

You can choose between the following values:

• monthly – accrual is done from the first to the last day of a month
• annually – accrual is done from the first to the last day of a year

1. Open your accounting configuration again.
2. In the field Deferred income interval, select the desired interval (monthly or annual).
3. Save the settings.

You can change the interval later as well. The software takes into account which service has already been provided and adjusts the bookings accordingly (e.g., when switching from monthly to annual or vice versa).

How the booking logic works (practical examples)

The following examples help you understand how the automatic booking works in the background. Normally, you do not need to create these bookings manually – they serve for transparency for you and your accountant.

Example 1: Annual fee with monthly accrual

• Contract signed on 01.01.2025, annual fee €120, service period 01.01.–31.12.2025.
• At the time of payment (e.g., 15.01.2025), the fee is posted to the PRA account.
• At the end of each month (for monthly interval), one twelfth (€10) is rebooked from the PRA account to revenue.
• At the end of the service period, the PRA account for this contract is at €0.

Example 2: Contract termination mid-year

• Termination on 17.08.2025.
• The software calculates the prorated revenue for August (e.g., 17 of 31 days ≈ €5.48) and only books this amount into revenue.
• The remaining balance remains as a credit and can be recorded as a refund to the member or as other income (extraordinary income) – depending on how you handle it in the studio.

Example 3: Fee adjustment during the service period

• Annual fee reduced from €120 to €110 in May 2025.
• Amounts already accrued for January–April remain unchanged.
• The software automatically redistributes the remaining annual fee over the remaining months and adjusts the PRA bookings.

Example 4: Pause period in the contract

• A pause is agreed upon in June 2025 (no training, no service).
• No revenue is released from PRA for this period since no service was provided.
• The service period is extended accordingly (e.g., by one month into the following year), and the PRA is released during the extension phase.

Example 5: Changing the interval

• Monthly → annually (e.g., on 15.07.2025): Already accrued months and prorated days (e.g., 14 days in July) are taken into account; the rest is released at the end of the year.
• Annually → monthly: The software first books the earned share into revenue and then switches to monthly recognition for the remaining term.

Exporting reports in the accountant portal

To allow you and your accountant to track the generated bookings, the software provides dedicated reports for deferred income in the accountant portal.

1. Open the accountant portal of your software.
2. Go to the Reports or Accounting exports section.
3. Select the report type for Deferred income accounting or Deferred income (passive accruals).
4. Set the desired period (e.g., a month or a year).
5. Choose one of the following exports:
   • Summarized Studio Export – summarized view per location
   • Detailed / Single Export – detailed view at individual transaction level
6. Export the data and hand it over to your accounting or your accountant.