This add-on module enables you to distribute expenses (e.g., insurance premiums, rent or lease agreements) over several periods. it is also used to capture deferred revenue.

The module appears as sub-menu items on the ‘Bookkeeping’ and ‘Report’ tabs.

This description assumes that you are familiar with the principles of basic prepayments.

how to setup and process prepayments

How to setup and process deferred revenue

It is necessary to define a number series, an account for prepaid expenses, and an alternative account for prepayments entries before setting up prepayments. If you selected a default account setup, these will already exist in your system. All three are described below.

To specify an entry number series for prepayments:
1.Click ‘Settings’ > ‘System setup’ > ‘Number series’
2.Click the ‘Edit’ icon to the right of ‘Prepayments/Depreciations/Balance entries’
3.In ‘Next number’, enter the number that you want the series to start with
4.Click ‘OK’


An account for prepaid expenses is used to capitalise the expense within the blance sheet, if you have selected a default setup this is account 1102.

To create an account for prepaid expenses:
1.Click ‘Settings’ > ‘Chart of accounts’
2.Click ‘New account’ above the list area
3.Edit the field details
a.In the ‘Type’ field, select ‘Balance sheet’
4.Click ‘OK’

For each prepayments expense account, an account is specified for the entries created when you accrue an expense. It is possible (but not mandatory) to create yet another, e.g., to discern between VAT and VAT exempt amounts.

To create and specify an alternative account for prepayments entries:
1.Click ‘Settings’ > ‘Chart of accounts’
2.Click ‘New account’ above the list area
3.Edit the field details
a.Type: Select ‘Profit and loss’
b.VAT: Select ‘blank’
4.Click ‘OK’
To link this account to accounts for expenses to be accrued:
5.Click the ‘Edit’ icon to the right of each account for expenses to be accrued
6.In ‘Prepayments account’, enter the number of the prepayments account created above
7.Click ‘OK’

To accrue an expense it is necessary to first capitalise it, then accrue it.

To capitalise an expense:
1.Click ‘Bookkeeping’ > ‘Day books’ > ‘[select the relevant day book, e.g., Daily]’
2.Click ‘New entry above the list area
3.Edit the fields [LINK to Settings > Chart of accounts] Details
c.Type: Select ‘Journal entry’
d.Capitalise: Enter the account for prepaid expenses
e.Start/End date: The first and last date of the period over which the expense is to be distributed.
Note: If no start date is entered, the date in the ‘Date’ field will automatically be used.
Note: The end date may be in an accounting year that has not yet been created.
4.Click ‘OK’
5.Confirm that the expense booked on the appropriate accounts has been credited to the expense account and charged to the asset account here:
6.‘Bookkeeping’ > ‘Prepayments’
7.Select the entry
8.Click ‘Show entries’ above the list area

Creating prepayments
When the expense has been capitalised, it can be accrued.

To accrue an expense:
1.Click ‘Settings’ > ‘System setup’ > ‘Accounting year’
2.Click ‘Periods’ to the right of the current accounting year
3.Click ‘Process prepayments’ to the right
4.Edit the fields [LINK] Details
5.Click ‘Show’
6.Click ‘Book entries’
NOTE: Once entries are posted, they cannot be deleted. If the entries have been booked incorrectly, they can be reclassified manually.

Details about the fields
Note that not all fields are mandatory

A prepayments report is used to reconcile and specify amounts on the account for prepaid expenses.

To print the prepayments report:
1.Click ‘Report’ > ‘Financial statements’ > ‘Prepayments’
2.Edit the fields [LINK] Details
3.Click ‘OK’

Details about the fields
Note that not all fields are mandatory

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