Field descriptions: Cancel Contract

Cancel Contract Line fields

Cancel contract line field descriptions
Field Description
Cancellation date

The effective date for the cancellation.

Billing scheduled on or after the cancellation date will be terminated. For example, say you have an invoice scheduled for March 15. If you use March 15 as the cancellation date, the March 15 invoice will be terminated. If you use March 16 as the cancellation date, the March 15 invoice is left open.

When the total revenue posted or scheduled to post prior to the cancellation date does not equal the total amount billed, Intacct will split the next scheduled period's revenue into two periods:

  • One period with Open status with a scheduled posting date of the Cancellation date minus 1 for the amount needed to make revenue equal to billing.
  • One period with Terminated status with its previously scheduled posting date for the remaining revenue amount.

Say you have a contract line that starts 01/01/2023 and ends 12/31/2023 with a Flat/Fixed amount of 100.00 with a Billing frequency of Include with every invoice. The contract line uses the Daily rate recognition method for its revenue schedule. In July, the customer calls and wants to keep service through the end of July but then cancel the contract line going forward. As of 07/31/2023 (the cancellation date minus 1), the total billed amount is 700.00, but the total scheduled revenue amount is only 696.98, which includes an Open amount of 101.92 already scheduled to post on 07/31/2023.

You cancel the contract line using 08/01/2023 as the cancellation date. On cancel, Intacct deletes the next period scheduled on 08/31/2023 for the amount of 101.92, splits it into two partial periods, schedules the difference needed to equal the billed amount on the cancellation date minus 1, and leaves the remaining terminated portion scheduled to post on 08/31/2023 as in the following example:

Shows an open entry scheduled for 07/31 for 101.92. Shows an open entry scheduled for 7/31 for 3.02. Shows a terminated entry scheduled for 8/31 for 98.90.

See Before canceling a contract schedule.
Apply to billing revenue schedules Select this checkbox to cancel both billing and revenue schedules. Although billing and revenue schedules might not be concurrent, they are canceled together.
Apply to expense schedules Select this checkbox to cancel all expense schedules associated with the contract line.
Create adjustments

Typically, you will only select Create adjustments if the billed amount prior to cancellation will never be paid. When you select this field, Sage Intacct creates an AR adjustment of type = Credit memo and automatically applies it to the correct contract invoice. The adjustment does the following:

  • Debits billed deferred revenue
  • Credits billed AR

Note the following expected behavior concerning the Create adjustments field:

  • If the Billed deferred revenue balance is different in Journal 1 and Journal 2, Intacct will not be able to create an adjustment.
  • As Intacct will automatically apply the adjustment to the correct contract invoice line item on cancellation, you cannot uncancel the contract line after it is canceled.
  • The payment posting date for adjustments is as follows:
    • If the cancellation date is before the invoice date, the payment date will be the invoice date.
    • If the cancellation date is after the invoice date, the payment date will be the cancellation date.
  • If one or more of the revenue templates associated with a contract line is a percentage of completion template (related to projects), you cannot select Create adjustments. In this scenario, create any necessary adjustments manually or use a debook contract line to reverse the effects of the invoice.
  • Evergreen contracts:
    • Intacct will automatically apply the adjustment to the open invoice for the current recurring billing period only. If you have open invoices from closed recurring billing periods that will never be paid, you will need to create and apply the necessary adjustments manually.
    • You cannot create an adjustment when canceling if you use a future cancellation date.

Sage Intacct automatically creates a reversal GL entry for any expense amounts that were posted after the cancellation date. For example, say you already posted an expense amount of 10.00 for February using a posting date of February 28. Later, you need to cancel the contract using a cancellation date of February 2. If you select to create an adjusting entry, Intacct will credit the Expense recognition account for 10.00 and debit the Expense accrual account for 10.00.

If your company is subscribed to the Taxex application, do not select Create adjustments. Instead, use a debook contract line to reverse any outstanding invoices.
Include unbilled usage with invoice generation

Select this checkbox if you want to invoice usage that has not yet been recorded or that you want to be available for invoicing after the cancellation date.
Generate any percent complete billing schedule entries Select this checkbox to have Intacct automatically calculate unbilled percent complete billing as part of the cancellation process. It will schedule the amount to post on the cancellation date minus one and leave it open on the billing schedule. Learn more about percent complete billing.

Cancel Contract fields

Cancel contract field descriptions
Field Description
Cancellation date

The effective date for the cancellation.

Billing scheduled on or after the cancellation date will be terminated. For example, say you have an invoice scheduled for March 15. If you use March 15 as the cancellation date, the March 15 invoice will be terminated. If you use March 16 as the cancellation date, the March 15 invoice is left open.

When the total revenue posted or scheduled to post prior to the cancellation date does not equal the total amount billed, Intacct will split the next scheduled period's revenue into two periods:

  • One period with Open status with a scheduled posting date of the Cancellation date minus 1 for the amount needed to make revenue equal to billing.
  • One period with Terminated status with its previously scheduled posting date for the remaining revenue amount.

Say you have a contract line that starts 01/01/2023 and ends 12/31/2023 with a Flat/Fixed amount of 100.00 with a Billing frequency of Include with every invoice. The contract line uses the Daily rate recognition method for its revenue schedule. In July, the customer calls and wants to keep service through the end of July but then cancel the contract line going forward. As of 07/31/2023 (the cancellation date minus 1), the total billed amount is 700.00, but the total scheduled revenue amount is only 696.98, which includes an Open amount of 101.92 already scheduled to post on 07/31/2023.

You cancel the contract line using 08/01/2023 as the cancellation date. On cancel, Intacct deletes the next period scheduled on 08/31/2023 for the amount of 101.92, splits it into two partial periods, schedules the difference needed to equal the billed amount on the cancellation date minus 1, and leaves the remaining terminated portion scheduled to post on 08/31/2023 as in the following example:

Shows an open entry scheduled for 07/31 for 101.92. Shows an open entry scheduled for 7/31 for 3.02. Shows a terminated entry scheduled for 8/31 for 98.90.

Expense amounts scheduled on or after the cancellation date will be terminated. The cancellation credits any deferred expense balance and debits any expense accrual balance.
Cancel all contract schedules Select this checkbox to cancel all contract lines and all expense lines in the contract. When you use this option, Intacct sets the contract State to Canceled.

Cancel contract line revenue and billing

Cancel contract line revenue and billing field descriptions
Field Description
Contract line no The contract line number.

Contract line item ID and Contract line item name

 The item ID and name associated with the contract line.
Create adjustments

Typically, you will only select Create adjustments if the billed amount prior to cancellation will never be paid. When you select this field, Sage Intacct creates an AR adjustment of type = Credit memo and automatically applies it to the correct contract invoice. The adjustment does the following:

  • Debits billed deferred revenue
  • Credits billed AR

Note the following expected behavior concerning the Create adjustments field:

  • If the Billed deferred revenue balance is different in Journal 1 and Journal 2, Intacct will not be able to create an adjustment.
  • As Intacct will automatically apply the adjustment to the correct contract invoice line item on cancellation, you cannot uncancel the contract line after it is canceled.
  • The payment posting date for adjustments is as follows:
    • If the cancellation date is before the invoice date, the payment date will be the invoice date.
    • If the cancellation date is after the invoice date, the payment date will be the cancellation date.
  • If one or more of the revenue templates associated with a contract line is a percentage of completion template (related to projects), you cannot select Create adjustments. In this scenario, create any necessary adjustments manually or use a debook contract line to reverse the effects of the invoice.
  • Evergreen contracts:
    • Intacct will automatically apply the adjustment to the open invoice for the current recurring billing period only. If you have open invoices from closed recurring billing periods that will never be paid, you will need to create and apply the necessary adjustments manually.
    • You cannot create an adjustment when canceling if you use a future cancellation date.
If there is any sales tax or other subtotals associated with the unpaid invoice, you still need to manually create a credit memo for the applicable amounts to receive against the invoice.

If your company is subscribed to the Taxex application, do not select Create adjustments. Instead, use a debook contract line to reverse any outstanding invoices.

See Before canceling a contract schedule for more information.
Include unbilled usage in invoice generation

Select this checkbox if you want to invoice usage that has not yet been recorded or that you want to be available for invoicing after the cancellation date.
Generate any percent complete billing schedule entries Select this checkbox to have Intacct automatically calculate unbilled percent complete billing as part of the cancellation process. It will schedule the amount to post on the cancellation date minus one and leave it open on the billing schedule. Learn more about percent complete billing.

Cancel contract line expense

Cancel contract line expense field descriptions
Field Description
Expense cancellation date

The effective date of the cancellation.

Expense amounts scheduled on or after the cancellation date will be terminated. The cancellation credits any deferred expense balance and debits any expense accrual balance.
Contract line no The contract line number associated with the expense

Contract line item ID and Contract line item name

 The item ID and name associated with the contract line.

Create adjusting journal entry

 If you select this checkbox, Sage Intacct automatically creates a reversal GL entry for any expense amounts that were posted after the cancellation date. For example, say you already posted an expense amount of 10.00 for February using a posting date of February 28. Later, you need to cancel the contract using a cancellation date of February 2. If you select to create an adjusting entry, Intacct will credit the Expense recognition account for 10.00 and debit the Expense accrual account for 10.00.

Cancel contract expenses

Cancel contract expenses field descriptions
Field Description
Expense line no. The expense line number.

Item ID and Item name

 The item ID and name associated with the expense.
Create adjusting journal entry If you select this checkbox, Sage Intacct automatically creates a reversal GL entry for any expense amounts that were posted after the cancellation date. For example, say you already posted an expense amount of 10.00 for February using a posting date of February 28. Later, you need to cancel the contract using a cancellation date of February 2. If you select to create an adjusting entry, Intacct will credit the Expense recognition account for 10.00 and debit the Expense accrual account for 10.00.