Update – I’ve had multiple conversations with the product team at Microsoft from the day after I posted this and the issues I highlighted have been recognised and I’ve been assured they will be fixed. I meet up with the guys responsible for financials functionality last week at Directions US and it was obvious from the questions they are well advanced with the detail of the solutions. If I was a betting man I’d put money on a cumulative update fixing it, one month soon.
You have to give respect to Microsoft, for such a huge company with such a successful product to respond at the rate they did is remarkable. Makes me very confident about the future. I’ll post another update as soon as I know more.
So Microsoft have almost eliminated one of the most common customisations in Dynamics NAV 2016 and enabled both sales and purchase transaction to be posted with the revenue or cost spread across multiple accounting periods. By selecting a Deferral Code on the line of sales or purchase documents you can spread the posting across as many periods as the transaction line applies to.
For companies that are selling or purchasing a services such as warranties, contracts, subscriptions or insurances this correctly represents the cost or revenue in the month the service was for rather than the month it was sold or purchased.
Why the almost in that first sentence? Well they got lots right but two fatal flaws mean its not really useable for most as it is.
The Good : Lots of flexibility
So Microsoft did a great job of giving lots of options about the spread of how the cost is spread. First you have select a deferral template code on the line and that code defines how many periods the account is spread over as well as when it starts.
You have a calc. method that determines how the cost or revenue is split across the different periods – most will be straight line I suspect but you do have equal per period, days per period and user defined if all else fails.
That start can be relative to the posting date of the originating transaction and you can make it the beginning or end of the period. If it’s the posting date it takes an amount into that period, that represents the number if days left in that period.
Even better the template is applied as soon as selected and you can manually adjust it by selecting the Line, Deferral Schedule option – really good so it you have an initial and ending ‘documentation fee’ for instance you can do the split correctly.
So having done all that good work Microsoft left two massive issues which makes me believe that this will need two significant customisations every time before its useable. To quote a customer who I went through this with last week, ‘like this it’s about as much use as a chocolate teapot’.
Standard Date Restrictions still apply
The first and most significant is that the standard posting date restrictions still apply to the deferred postings! That means that if you operate best practise and restrict your users to not posting past the end of the current period they will never be able to use deferrals at all!
What this really needs is a separate date restriction in the general ledger setup for deferral postings. Then you need to make calls to check these new dates in two places in in codeunit 12 and a few more in the new Codeunit 1720 for Deferral Utilities.
The same Deferral Templates apply to both sales and purchase transactions
The second issue is that on the deferral templates you define the control account you want the deferral to. No issue with that except that you can select any of the templates from either the sales or purchase transactions. That means your accrual and reserves are going to get mixed up if your input people are not very careful in deed.
Now I’m not an accountant but I am aware of how sensitive accountants are about their what’s accrued and what’s reserved. The whole point is that they mean you correctly represent your current financial position so having the possibility of posting one to the other just doesn’t bare thinking about.
There should be a type field on the deferral template with a filter on the lookup from the sales and purchase lines so they can only select the correct templates.
What especially annoying is that the customisations needed to put this right are invasive ones that cannot, as far as I can see, be done using the new NAV extensions. Its modifications to some of the most commonly modified objects line sales line as well.
So in summary showed promise with this Microsoft but lost it at the final run in. Please get it right in ‘Madeira’ (the version that will be released in 2017) please.