Deferred revenue and income in advance in Xero

If you invoice a customer for a year of service up front, the revenue belongs to the months you deliver it. Xero records an invoice’s revenue on the invoice date. The idea “Invoices – Ability to recognise future revenue” was marked Not in pipeline on 7 March 2023; Xero suggested looking at connected apps for revenue recognition.

The manual way in Xero

A commenter on that idea describes the common workaround: post the annual invoice to an “Income in Advance” account, then set up a monthly repeating journal moving 1/12 to the revenue account. They also describe the risk: when a client leaves, you have to remember to delete the repeating journal as well as the repeating invoice.

Code the sales invoice to a deferred income (income in advance) liability account.
Each month, debit deferred income and credit revenue for that month’s share.
Keep a schedule of what is left to recognise per invoice, and tie it to the balance sheet.

What Amortline does

Add the invoice as a Deferred revenue line in Amortline’s template, with the service start and end dates, the revenue account and the deferred income account.
Each month-end journal debits deferred income and credits revenue, spread daily, equal monthly or monthly by days, to the penny.
When a client leaves: enter the cancellation date and choose Refund (the refund or credit note you post in Xero clears the rest) or Release (the rest goes to revenue in that month). Recognition stops at the cancel date.
Price changes: a new amount from a change date re-spreads what is left; months already posted stay as posted.
The posting record means a rerun of the same month posts nothing new, and the working paper shows the deferred income roll-forward per account.

The same template holds prepayments and accruals, so one run covers a client’s month-end schedules. In Xero, go to Reporting › All reports › Journal Report › Go to manual journals › Import, and choose the file. The journals arrive as drafts for you to check and post.

What it doesn’t do

It isn’t a revenue recognition engine for contracts with several performance obligations: it spreads an amount straight-line over a period you set.
It doesn’t read invoices from Xero or post anything; you import the journal file.

Try it on your own schedule. Free, no sign-up, nothing uploaded. The free version covers one client, and the journal file, posting record and working paper cover 3 lines per client. The Practice plan (£12 per month or £120 per year) covers every line and every client: see pricing.

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Amortline is independent and not affiliated with or endorsed by Xero. Xero is a trademark of Xero Limited. This guide was checked against the linked sources on 27 October 2026; Xero changes its product, so check the current Xero Central article if a menu looks different.