We would like Dynamics 365 Finance to support an automated update or adjustment mechanism for deferral schedules when the final vendor invoice amount differs from the original purchase order amount, especially in project item requirement scenarios where deferred costs must be recognized evenly over time.
Currently, when a purchase order line is updated and the related item requirement amount reflects the updated cost, the existing deferral schedule does not update accordingly.
As a result, the deferral schedule continues to recognize the original amount, even though the project cost reflects the updated vendor invoice amount.
This creates a mismatch between the actual supplier cost and the deferred cost recognized in P&L.
Business Scenario
The customer invoices subscriptions yearly while recognizing both revenue and cost evenly each month.
To achieve this, they use deferral schedules so the yearly cost and revenue are spread across the relevant months.
The issue occurs when the supplier’s final vendor invoice amount is higher than the original purchase order amount.
The project correctly reflects the updated supplier cost after the vendor invoice is posted, but the deferral schedule remains based on the original amount and does not reflect the updated cost.
For example, the original deferral schedule is created for 12,000.
Later, the vendor invoice comes in at 12,500. After the purchase order line is updated and invoiced, the project transaction reflects the updated amount, but the deferral schedule remains at 12,000 instead of updating to 12,500 or creating an additional deferral adjustment for the difference.
Current Behavior
When the deferral schedule is created, it is based on the item requirement record at the time of deferral creation.
If the purchase order price is changed later, the existing deferral schedule is not automatically updated.
This means that even if the item requirement amount is updated through the purchase order flow, the related deferral schedule does not recalculate or adjust to reflect the new cost amount.
Expected Behavior
Dynamics 365 Finance should provide a supported mechanism to ensure the deferral schedule accurately reflects the final vendor invoice cost when that cost differs from the original purchase order amount.
The expected behavior could be one or more of the following:
- Automatically recalculate the existing deferral schedule when the related item requirement amount is updated due to a purchase order/vendor invoice price change.
- Automatically create an additional deferral adjustment schedule for the difference between the original deferred amount and the final vendor invoice amount.
- Provide a controlled user action to recalculate or adjust the remaining deferral schedule balance based on the updated cost.
- Ensure the deferral balance account and P&L recognition remain aligned so that all actual vendor costs are fully recognized over time.
Business Impact
Because the deferral schedule is not updated with the correct cost, the customer cannot fully recognize the actual subscription cost in monthly P&L.
This can lead to understated costs, incorrect financial reporting, misstated margins, and revenue/cost recognition concerns.
It also creates additional manual correction work for finance teams and increases the risk of errors.
If the vendor invoice posts a higher amount than the deferral schedule, a remaining balance can stay on the balance account, while P&L recognition continues only for the original deferred amount.
This creates an accounting mismatch because the balance account and P&L recognition do not fully clear/align when the deferral schedule is completed.
Proposed Enhancement
Please enhance Dynamics 365 Finance so that deferral schedules can remain synchronized with final vendor invoice costs in project/subscription billing scenarios.
The enhancement should ensure that when a vendor invoice is posted for an amount different from the original purchase order amount, the system can either:
- update the existing deferral schedule,
- create a separate system-generated deferral adjustment for the difference,
- or provide a supported recalculation/adjustment action for finance users.
This would help finance teams correctly recognize actual costs over time, avoid residual balance account amounts, reduce manual corrections, and improve financial reporting accuracy.