Overview
Event-Based Revenue Recognition enables revenue to be recognised based on actual business events rather than being automatically spread over time at invoice posting. This approach supports scenarios such as event attendance, usage-based billing, token consumption, or externally triggered activities, while maintaining full auditability and compliance within Microsoft Dynamics 365 Business Central.
The feature extends standard deferral functionality by allowing revenue recognition to be triggered manually or via an API, ensuring that revenue is recognised only when the underlying business obligation has been fulfilled.
Business Value
Event-Based Revenue Recognition delivers significant financial, operational, and compliance benefits:
From a financial accuracy perspective, revenue is recognised strictly in line with real-world consumption or delivery events, supporting compliance with revenue recognition standards such as IFRS 15 and ASC 606. This eliminates premature or overstated revenue that can occur with purely time-based deferrals.
From a business flexibility standpoint, organisations can support modern commercial models including subscriptions, prepaid credits, usage-based pricing, and event-driven services without custom workarounds or manual journal entries.
From an operational efficiency perspective, finance teams retain full control over when and how revenue is recognised, while automation through batch processing and APIs reduces manual effort and integration complexity.
From a governance and audit perspective, every recognition event is fully traceable, with clear visibility of remaining deferred balances, pending recognitions, and recognised amounts, as well as the origin of each recognition trigger.
Prerequisites
Before configuring Event-Based Revenue Recognition, ensure that:
- Deferral templates are already in use within Business Central.
- Appropriate deferred revenue and revenue G/L accounts are configured.
- Users responsible for revenue recognition have permission to view and edit deferral schedules.
- For API-driven recognition, the external system and authentication are already set up.
Configuring the Deferral Template
Open the Deferral Templates list and select an existing template or create a new one.
In the Event Based Configuration section, configure the following fields:
Event Based Revenue Recognition
Enable this option to activate event-based behaviour for the template. When enabled, revenue will not be recognised automatically at invoice posting.
Event Based Type
Select one of the following:
- Date Based – Revenue is recognised on predefined schedule dates, but only through the event-based batch process.
- Trigger Based – Revenue is recognised only when a manual or API trigger creates a recognition event.
Save the deferral template after completing the configuration.
Using Event-Based Deferrals on Sales Orders
Create a sales order and assign a deferral code that is configured for event-based revenue recognition.
Post the sales order and invoice it as normal.
When the invoice is posted:
- Revenue is posted entirely to the deferred revenue balance sheet account.
- No revenue is recognised to the profit and loss statement at this stage.
The deferral schedule becomes the central place to manage recognition events.
Understanding the Deferral Schedule Header
For trigger-based templates, the deferral schedule header displays key balances that are updated automatically:
Uncaptured Amount
The portion of revenue not yet allocated to any recognition event.
Pending Amount
The portion allocated to events that are approved but not yet recognised.
Recognised Amount
The portion already recognised in the general ledger.
Last Recognition Date
The most recent date on which revenue was recognised.
These values always reconcile back to the original deferred amount.
Creating Recognition Events Manually
From a posted sales invoice line, open the Deferral Schedule.
Create a new deferral schedule line and enter either:
- A fixed Amount, or
- A Percentage Recognition of the original deferred amount.
Specify a Posting Date that falls within the subscription or service period.
The system automatically:
- Calculates the corresponding amount or percentage.
- Updates the uncaptured and pending balances.
- Sets the event status to Draft.
Change the Event Based Status to To Process when the event is ready for recognition.
Processing Revenue Recognition
Revenue recognition is executed via a batch process.
Run the Event-Based Revenue Recognition batch job, either globally or from a specific deferral schedule.
The batch process:
- Selects all deferral schedule lines marked To Process.
- Validates that the posting date is not in the future.
- Posts the appropriate revenue recognition journal.
- Updates balances and marks lines as Processed.
Once processed, recognition lines can no longer be edited or deleted.
Triggering Recognition via API
For automated scenarios, revenue recognition events can be created via a Business Central API.
External systems can submit recognition requests by amount or percentage, including optional references for traceability.
Upon successful validation:
- A deferral schedule line is created automatically.
- The line is marked To Process.
- Source details are stored for audit purposes.
These API-created lines follow the same batch recognition process as manual entries.
Monitoring and Auditability
Users can monitor revenue recognition by reviewing:
- Deferral schedules at invoice or order line level
- Recognised, pending, and uncaptured balances
- Source and reference information for each recognition event
This ensures full transparency and simplifies both internal reviews and external audits.
Summary
Event-Based Revenue Recognition allows organisations to align revenue recognition with real business events while maintaining the structure, controls, and auditability of standard Business Central deferrals. By combining manual control, automation, and integration capabilities, it provides a scalable foundation for modern revenue models without compromising financial integrity.