This article explains how to account for early renewals and early terminations associated with renewals at a different rate

This applies correct IFRS principals for an early termination which has not yet been fully recognised but which is terminated by mutual consent and superceded by a new agreement and payment.

Option 1. Create an explicit customer discount for the existing prepaid amount

One option is to explicitly show a discount on the upgrade invoice for the amount already paid in the previous invoice.

Create a line item crediting the customer for the amount not yet recognised from the previous invoice.  In the text, use words which show the start and end date of the discount where

• start date = upgrade invoice date
• end date = end date of previously invoiced amount
• the amount of the credit should equal the remaining invoiced amount in the previous invoice.

Then create a line item which increases the new invoice to offset the invoice (gross amount) and use the start and end date for the new invoice period.

Option 2. Create an adjustment in ScaleXP to reallocate the revenue

If you prefer not to make these adjustments visible to the customer, then you can generate them in ScaleXP instead.

First, create a manual credit note in Scale XP.  See below for how to do this.

On this manual credit note:

• Set the negative value to equal the unallocated revenue from the previously issued contract invoice.
• Set the start and end date to reflect the time period remaining unallocated on the previously issued invoice.
• Save the credit note (negative invoice).

Then create a manual invoice.

• Set the value to equal the opposite of the credit note
• Set the start and end date to equal the start and end date of the new invoice period.
• Save the invoice.

Note - you can also create the credit note and invoice as separate line items on a single manual invoice with a total value of nil.  This works for any manual invoice as long as the revenue recognition date is different from the credit recognition date.

How to create a manual invoice or credit note in ScaleXP for an existing customer

Go to the Customers tab where you can see information on existing invoices, then

Click on the arrow "^" next to the customer name to expand customer detail and then select "+Add Manual Adjustment" at the bottom of the invoice list.

Use negative numbers to create a credit note.

Use positive numbers to create an invoice.

Be sure that your filters are set to show all customer invoices

You will be prompted to enter the new invoice detail.  Then Save.