You've now created the prepayment. The software will process this when you next run your month end routine by selecting the prepayment check box.
Automatic prepayment postings
EXAMPLE: Prepay £/€600.00 for rent every three months and account for the cost over that period. Process the rent invoice or payment as usual as a purchase invoice or a bank payment to the rent nominal code. After creating the prepayment, the following transactions post during the month end routine.
Month one
| Transaction | N/C | Nominal Name | Debit | Credit |
| Prepayment Reverse | 1103 | Prepayments | 600.00 | |
| Prepayment Reverse | 7100 | Rent | | 600.00 |
| Prepayment 1 | 7100 | Rent | 200.00 | |
| Prepayment 1 | 1103 | Prepayments | | 200.00 |
In month one, the reverse prepayment immediately cancels the effect of the original payment or invoice. The monthly value posts back to the rent nominal code, adjusting the rent account to £/€200.00 per month instead of £/€600.00.
Month two
| Transaction | N/C | Nominal Name | Debit | Credit |
| Prepayment 2 | 7100 | Rent | 200.00 | |
| Prepayment 2 | 1103 | Prepayments | | 200.00 |
Month three
| Transaction | N/C | Nominal Name | Debit | Credit |
| Prepayment 3 | 7100 | Rent | 200.00 | |
| Prepayment 3 | 1103 | Prepayments | | 200.00 |
At the end of the final month, the net effect on the prepayment nominal code is zero. This is because the three monthly instalments reverse the original posting from month one.
TIP: If you can't evenly divide your prepayment amount by the number of months, the software rounds in the final month.
Accruals
Set up an accrual
EXAMPLE: We're creating an accrual for a telephone bill that we receive every three months. We've estimated the charge to be £/€300.00.
- Go to Nominal codes, then click Accruals.
- Enter the relevant information to record the Accrual in the Accruals window, for example:
TIP: If preferred, you can click Wizard then follow the on-screen prompt.
| N/C | Nominal code, for example, Electricity |
| Details | Description, for example, Accrual |
| Department | Enter a department, if required |
| Fund | Enter a fund, if required. Only available if you've the charities option enabled |
| Accrual N/C | Updated automatically |
| Value | Total net accrual value, for example, 300.00
TIP: If the monthly values change during the length of the accrual, delete and re-add the accrual. |
| Months | Number of months for the accrual. This can be between 2 and 12 |
| Monthly Amount | Updated automatically |
| Posted | Updated automatically |
- Click Save, then OK.
You've now created an accrual. The software will process this when you next run your month end routine by selecting the accrual check box.
Automatic accrual postings
EXAMPLE: Create an accrual to accrue £/€100.00 a month for electricity, to account for the cost for over a three-month period. The accrual postings then reverse in the final period.
Month one
| Transaction | N/C | Nominal Name | Debit | Credit |
| Accrual 1 | 7200 | Electricity | 100.00 | |
| Accrual 1 | 2109 | Accruals | | 100.00 |
The software posts the monthly value to your expense nominal code each month, and the opposite entry posts to your accruals nominal code.
NOTE: The Accruals nominal code is a current liability on the balance sheet, showing the value of services used but not yet paid for.
Month two
| Transaction | N/C | Nominal Name | Debit | Credit |
| Accrual 2 | 7200 | Electricity | 100.00 | |
| Accrual 2 | 2109 | Accruals | | 100.00 |
Month three
| Transaction | N/C | Nominal Name | Debit | Credit |
| Accrual 3 | 7200 | Electricity | 100.00 | |
| Accrual 3 | 2109 | Accruals | | 100.00 |
| Accrual Reverse | 2109 | Accruals | 300.00 | |
| Accrual Reverse | 7200 | Electricity | | 300.00 |
Reverse the total value of the monthly postings in the final month, reducing the balance on the accruals and expense nominal codes to zero.
The monthly balance on the expense nominal code for the final month is a credit balance. In the above example, after the final accrual posting the month three balance on the Electricity account is a £/€200.00 credit balance. If you run a report to show the monthly values, a liability shows in months one and two.
When you post the actual invoice or payment, the balance changes to a debit which represents one month's value. For example, a £/€315.00 electricity bill is £/€15.00 higher than you've accrued for, so month three £/€115.00.
TIP: If you can't evenly divide your prepayment amount by the number of months, the software rounds in the final month.
Any discrepancies appear in the final month as you don't know how much the invoice will be in advance so you make an estimate. If this happens, leave the discrepancy in the final month.
If you miss a month
Always run your month end routine in month order. If you've missed a month and run the next month end, it isn't possible to go back and run it again.
If you've just run the month end routine, restore a pre-month end backup. You can then - the month end option for last month, then run it for this month. You'll need to enter any transactions posted since you took the backup again.
What to do if you can't restore a backup
If you're unable to restore a backup, delete all prepayments and accruals. You can then continue to post them manually for the remaining period of the prepayment or accrual.
If you need to delete a prepayment or accrual from the list, use function key F8.