Background

We are global company complying to IFRS. IFRS 15 paragraph 38 is saying “Revenue recognition needs to be done by Customer’s acceptance basis”. Thus, we are gathering POD (Proof of delivery: customer signature for the delivery arrives to customer location). Then, recognize the revenue. Following is operation sequence in another group company.

1.      Customer order goods

2.      Canon staff create the sales order

3.      Request warehouse to make shipment

4.      Delivery man deliver the goods to customer. Get customer signature (POD)

5.      When POD is confirmed, post the invoice. System recognize the revenue.

6.      Send invoice electronically or physically to customer.

Issue

India tax authorities are requesting E-invoice and E-Waybill. E-Waybill needs to be prepared before shipment in case of B2B. (Event 4). E-invoice and E-waybill can be done by API with IRP (Invoice registration portal).

On the other hand, Dynamics 365 F&O has standard localization package to communicate with IRP. The data source of the API with IRP is invoice journal as far as we tested. As E-waybill needs to be printed before shipment, invoice post needs to be done before shipment. Following operation needs to be done.

1.      Customer order goods

2.      Canon staff create the sales order

3.      Post the invoice in order to communicate with IRP. System recognize the revenue.

4.      Get E-invoice by D365 localization feature

5.      Get E-waybill by D365 localization feature

6.      Request warehouse to make shipment

7.      Delivery man deliver the goods to customer. Get customer signature (POD)

Issue is revenue recognition timing. In order to get E-invoice information, we can not comply IFRS 15.

Proposal

As Dynamics 365 FO uses Invoice journal as data source of E-invoice and E-waybill, we want to have standard method of the defer revenue and cost of sales in order to comply to IFRS 15. I think several options.:-

a) Give the option to make packing slip as data source of E-Invoice or E-waybill (Setup in Electronic reporting feature)

b) Keep the proforma invoice in Invoice journal database (Standard Proforma invoice deletes the records from invoice journal information after showing the Printing) and make data source of E-invoice and E-waybill. Then, after actual posting, take over the relationship E-invoice and E-waybill.

c) Instruction to setup the revenue and expense deferrals in Subscription billing