I have been asked about POs with terms that include a down payment. Such as 50Down, 50Net30.
We’re receiving portions of a Purchase Order, which had a deposit/down payment and as a result, we’re unable to recognize revenue associated with the equipment we’re receiving until the entire PO is closed.
Here is an example from the user:
To provide an example, let’s say we have a $1M Purchase Order, and we made a 20% down payment. We just received $666k worth of the units (4 of 6 units) and would like to recognize this expense and revenue. But because there was a down payment, our understanding is that we can’t recognize the expense until all 6 units arrive and we can close out the PO. The workaround that we’re aware of is to go back and break this single PO into two, such that one PO has 4 units and the other has 2, allowing us to close/satisfy the entire 4 unit PO.
Is there a way to recognize the revenue so far? I’m not a bean counter but can pass along suggestions. I found what seems to apply in a post from seven years ago and suspect this might apply to using Advance Billing.
Kinetic 2021.2.11 SaaS
Thanks,
-Todd C.
