You invoice a customer in January for a year of support. The cash shows up now, but the revenue belongs to all twelve months. Same story on the expense side: you pay your insurance premium once and it covers the whole year. Deferrals are how your ERP spreads those amounts across the right periods — and how you do that in Dynamics GP and Dynamics 365 Business Central is a study in two different eras of software design.
In GP, deferrals live in an add-on module, and someone has to remember to set up the deferral on every single transaction. In Business Central, deferrals are built into the core system, and a template on the item or account does the remembering for you. Round 28 of our GP vs. BC Functionality Face-Off breaks it down.
How you do it in Dynamics GP
GP handles this with the Revenue/Expense Deferrals module. It is a separate feature you (or your partner) install from the GP media and then initialize before anyone can use it, as described in Microsoft’s GP General Ledger manual.
Setup happens in the Deferral Setup window (Financial >> Setup >> Financial >> Deferral). Here you make some big decisions up front:
- Pick a posting method. GP offers two: the Balance Sheet method, which parks the deferred amount in a balance sheet account and recognizes it period by period, and the Profit and Loss method, which posts through your P&L accounts. Microsoft recommends you never change this after you start posting deferrals.
- Set batch numbers and user access. You assign the next deferral batch number, a source document code, and which users are allowed to work with deferrals.
- Decide how voids behave. You can choose whether voiding an original transaction also voids its deferrals.
Then comes the daily reality. When you enter a transaction — a sales invoice, a payables invoice, a journal entry — the deferral does not happen on its own. The person keying the entry must open the distribution line, go to the Additional menu, and set up the deferral there: the account, the start and end dates, and the method. GP supports this from General Ledger, Receivables, Payables, Sales Order Processing, Purchase Order Processing, and Invoicing. But as Microsoft’s own deferrals FAQ puts it, “the user must know to enter the deferral.”
Forgot one? There is a Retroactive Deferral window to build deferrals for transactions that already posted. Keyed one wrong? You cannot edit the accounts or amounts on an existing deferral. The fix is to void the entire deferral transaction and re-enter it — or post offsetting journal entries by hand.
It works. Thousands of companies close their books with it every month. But it depends on well-trained people doing the same manual step correctly, every time, on every transaction that needs it.
How you do it in Business Central
Business Central was built cloud-first, and deferrals are part of the base application — nothing to install, nothing to initialize. The workflow, laid out in Microsoft Learn’s deferrals guide, has three parts:
1. Create a deferral template. On the Deferral Templates page, you define the pattern once: the deferral account, the number of periods, when recognition starts (including options like “beginning of next period” or “beginning of next calendar year”), and the calculation method — Straight-Line, Equal per Period, Days per Period, or User-Defined if you want to type your own amounts. You can even set a period description with placeholders, so every entry automatically reads something like “Support revenue deferred for March 2027.”
2. Assign the template as a default. Open the item, resource, or G/L account and set the Default Deferral Template field. That’s the magic step. Your annual support item gets the 12-month revenue template. Your prepaid insurance account gets the 12-month expense template.
3. Post like normal. When anyone posts a sales or purchase document with that item or account, Business Central builds the full deferral schedule automatically. No extra window, no memory test. If a specific deal needs something different — say, 6 months instead of 12 — you open the deferral schedule right from the document line and adjust it before posting. You can also use Preview Posting to see every deferral entry before you commit.
Afterward, the built-in Deferral Summary reports for G/L, Sales, and Purchasing show what has been recognized and what is still deferred — and recent updates added Excel layouts and list pages you can slice in Analysis Mode, the same tool we covered in Round 25. Accounting managers can even set “Allow Deferral Posting From/To” dates per user, so deferral entries can post into future periods without opening those periods up for everything else.
Side by side
| Dynamics GP | Business Central |
|---|
| Dynamics GP | Business Central | |
|---|---|---|
| Where deferrals live | Separate Revenue/Expense Deferrals module you install and initialize | Built into the base application |
| Setting the rules | Deferral Setup window; posting method is hard to change later | Deferral templates; make as many as you need |
| On each transaction | User must open the distribution and key the deferral manually | Schedule builds automatically from the default template |
| Forgot the deferral | Retroactive Deferral window to patch it after the fact | Rarely an issue — the template fires on posting |
| Fixing a mistake | Void the whole deferral and re-enter, or key offsetting JEs | Edit the schedule on the document before posting; preview first |
| Recognition entries | Deferral batches post per your setup choices | Posted automatically with the document, per the schedule |
| Visibility | Deferral inquiries and reports | G/L, Sales, and Purchasing Deferral Summary reports plus Analysis Mode |
Why BC comes out ahead
The difference is where the knowledge lives. In GP, the deferral rules live in your staff’s heads. Every correct deferral depends on someone remembering the Additional menu, picking the right account, and typing the right dates — twelve months a year, through every vacation and every new hire. In Business Central, the rules live in the system. You decide once that support revenue spreads over twelve months, attach the template, and every invoice after that follows the rule automatically.
That’s the same pattern we’ve seen all series long: recurring journal entries that post themselves, fixed assets that never drift from the ledger, and now deferrals that never get forgotten. BC moves the repetitive work from people to the platform — and month-end gets quieter because of it.
Let’s talk about your deferrals
If your team is still keying deferrals line by line in GP — or worse, tracking them in a spreadsheet on the side — we should talk. Aisling Dynamics helps companies move from GP to Business Central and set up deferral templates that match how they actually earn revenue and consume expenses. Check out what we offer, or contact us at (251) 293-0555 for a no-pressure conversation.
Next up in the Face-Off: bank deposits and transactions — how GP’s Bank Transaction Entry stacks up against BC’s bank account ledger.