At the end of the fiscal year, customers may request invoices for orders that have not yet shipped, especially for large equipment orders. These invoices are often required for accounting, financing, or reporting. Cetec ERP allows you to generate the invoice without picking inventory, while posting the amount to a deferred revenue account. Revenue is recognized when the items ship, keeping accounting aligned with the correct period.

This process is used when products are still in production, a downpayment or prior progress invoice already exists, and the customer requires an invoice now. It is important that revenue is deferred until shipment, as generating a standard invoice would prematurely recognize revenue. The order should be fully entered in Cetec ERP, including all line items, quantities, and pricing, and any prior progress invoices should be noted so the correct amounts are billed.

Before creating the progress invoice, it is necessary to check that a Deferred Revenue account is set in the GL Transaction Mapping for progress invoices. Navigate to Configuration → GL Transaction Mapping → Progress Invoice and ensure a liability account, such as Customer Deposits or Deferred Revenue, is selected. Without this account, revenue cannot be deferred and would post immediately, causing accounting discrepancies.

To create the invoice, open the order and click Progress Billing. The system will display all line items with the previously billed amounts, order quantities, and remaining balances. Enter the invoice date, which should reflect the current date for year-end purposes, and input the amounts to invoice for each line item. If the customer is being billed for the full remaining balance, enter those amounts; otherwise, partial amounts can be entered as needed. Check the Defer Revenue box to ensure that revenue posts to the Deferred Revenue account rather than the revenue account. This is critical for orders that will not ship until a later period.

After entering all line item amounts, review totals, tax, and freight to ensure accuracy. Click Create Progress Invoice to generate the invoice. The customer can receive this invoice immediately, while revenue is deferred on the back end. This allows accounting and funding needs to be met without prematurely recognizing revenue.

Once the products ship in the next fiscal period, generate the final invoice for the order. Cetec ERP will automatically transfer the deferred revenue to the revenue account, completing the revenue recognition process.

Best practices include checking GL mappings before generating progress invoices, documenting customer instructions in the order notes, tracking deferred invoices for reporting and audit purposes, and providing clear line-item descriptions to simplify accounting reconciliation. For orders with multiple items or multiple customers, repeat the process as necessary for each line item.

An example of this process would be an order where the products ship in January but the customer requires a year-end invoice. Progress billing is created with Defer Revenue checkbox checked. The invoice posts to Deferred Revenue, the customer receives it immediately, and revenue transfers to the revenue account automatically when the products ship in January. This process satisfies the customer’s accounting needs while ensuring proper revenue recognition.