What is unearned income?
Unearned income is money you have received in advance of having earned it. Another way of looking at it is when you invoice a job up front, that money isn’t yours until you’ve done the work. As you complete the work, Synergy unearned income helps you differentiate between what you’re allowed to keep as revenue (because you’ve now earned it by doing the work) from what remains to be earned (because you haven’t done the work yet). The tax office doesn’t count that money as yours, and neither should you!
An enhancement to the project performance — earned value management (EVM) feature
In the initial release of the Synergy project performance — earned value management (EVM) feature, when you tell us how far through the work you are, we can use that to calculate a prediction of when you’ll finish the job and what it’s going to cost you to complete. You or your project managers do this by keeping the percent complete slider up to date on all stages of your projects.
Because you’ve put in that percent complete, if there is an upfront payment, Synergy also knows how much of that can be released from the deferred income account and put into revenue.
With Synergy unearned income and project performance, the CFO now has a reliable, auditable, completely justifiable-to-the-taxman, way of showing how you’ve calculated how much of that revenue that is unearned versus how much is earned.
Read the Synergy unearned income blog by Synergy product manager Paul Hemmings.