If a Service Contract is prepaid and has a discount on it then the discount amount is recognised in full in the first month of recognition. It is not spread across the invoicing period which means the recognition amounts are incorrect for the length of the invoice.

For instance a contract is set up with Annual billing for £1,200 and should be recognised at £100 per month. A 10% discount is agreed that totals £120 for the Annual invoice. When the recognition routine is run the first month shows £120 discount and £100 income, this means the contract shows a £20 loss in the first month. The system should recognise £100 income and £10 discount for each month.