How Does Placing Revenue Recognition On Hold Impact NetSuite Invoices?

The impact of putting revenue on hold in NetSuite depends on whether a revenue recognition rule is assigned to the invoice line item:

1. Invoice line item does not have a revenue recognition rule:

   • The GL impact posts directly to the revenue (income) account.
   • Revenue is recognized immediately upon invoicing.

2. Invoice line item has a revenue recognition rule:

   • The GL impact posts to a deferred revenue account, regardless of the specific rule.
   • Revenue is subsequently recognized by running the “create revenue recognition journal entries” process, following the revenue recognition schedule assigned to the invoice line.

3. Putting revenue on hold when an invoice line item has a revenue recognition rule:

   • The GL impact of the invoice itself remains unchanged.
   • Users will not be able to see invoice lines that are on hold when running the “create revenue recognition journal entries” process, even if a catch-up period is defined on the invoice line (a catch-up period indicates when revenue recognition activities will resume upon hold release).
   • While it may be possible to release the hold and change the catch-up period of an invoice line even if the invoice is in a closed period, the ability to post revenue recognition journal entries into a closed or locked period is generally restricted. To manage this, click on “Manage Revenue Recognition” on the invoice.

4. Putting revenue on hold when an invoice line item does NOT have a revenue recognition rule:

   • The GL impact of the invoice WILL CHANGE.
   • The GL impact line on the invoice will post to a deferred revenue account instead of the revenue (income) account, even without a revenue recognition rule assigned to the line item.

Releasing a Revenue Recognition Hold in a Closed Period:

• NetSuite may allow the release of a revenue recognition hold for an invoice in a closed period if the invoice line has a revenue recognition schedule. However, if the invoice line has no revenue recognition schedule, releasing the hold in a closed period is generally not possible.
• The hold does not affect the GL impact of the invoice when a revenue recognition schedule is present; rather, it impacts the ability to create revenue recognition journal entries. Conversely, the hold will change the GL impact of the invoice if no revenue recognition schedule is assigned. It is important to note that NetSuite generally does not allow posting changes to transactions in closed periods.
• If a hold cannot be released on a line item without a revenue recognition schedule when the transaction is in a closed period, the associated revenue may remain in a deferred state. To reconcile this, options include re-opening the period to make appropriate adjustments or posting a manual journal entry to balance the accounts, though the latter is generally not recommended.

The same logic applies to the “Delivered” checkbox when using VSOE (Vendor Specific Objective Evidence), as delivery status is a criterion for determining revenue recognition eligibility for a line item.

For these reasons, it is recommended to assign revenue recognition rules to every line item on an invoice when revenue recognition is involved.