UK Invoicing queries


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Hi,
I work for a company that sell software licensing. For a lot of our customers we require payment upfront before we send them their license.
At the moment we provide proforma invoices, then upon receipt of payment we supply the license along with a final invoice.
As we are global, we have a lot of customers who's procurement process cannot accept proforma invoices and require the final invoice to be able to make a payment to us.
What would be the best practise for removing proforma's? If we provide a final invoice prior to payment and supplying the goods, is this unearned revenue? How would we adjust for that? We don't want to offer credit terms due to other company policies. We still want to keep the process of receiving payment before supplying the licenses.
Any help would be appreciated! Thank you :)
 
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Fidget

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Treat is as deferred income (same thing as unearned income). The effect is that it stays on the balance sheet until the license has been given. So when you invoice, you'll:

Dr: Receivables (balance sheet)
Cr: Deferred Income (balance sheet)

Then when the money is paid in:

Dr: Bank (Balance sheet)
Cr: Receivables (Balance sheet)

and when license is given:

Dr: Deferred income (balance sheet)
Cr: Revenue for license (P&L)
 

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