Prepayment Schedules

A prepayment schedule is used to schedule the posting of income or expenditure from an initial value recorded to a Balance Sheet account to be spread over a selected time period (months, quarterly etc.) to appropriate income or expenditure accounts.

Usually only relevant when accrual accounting (Income and Expenditure reporting for Not-for Profit organisations) is adopted; the balance sheet accounts used must be the system accounts

Accruals and Deferred Income

Items which owed or potentially owed by the organisation to third parties and are classed as account type - Current Liabilities.

Prepayments and Accrued Income

Items which third parties owe or potentially owe to the organisation and are classed as account type - Current Debtors

Sub-accounts of these two may also be used. Note if the accounts are not currently in the organisation's chart of accounts add from the list of standard accounts.

Accounts - Add Standard Accounts

Sub-accounts can be created via Add a Custom Accounts being sure that any account created is a sub-account either of Accruals and Deferred Income or Prepayments and Accrued Income

Setting up a Prepayment Schedule

In summary the process is :-

• Create the initial transaction with the value that will subsequently be spread to accounting periods
• Navigate to the transaction and from the Action Menu select Add Prepayment Schedule
• Enter the schedule details and click SUBMIT
• The system will post Journal Entries to reflect the dates and and selections made on the schedule

Examples of common situations and approaches

Accruals

Accrual means an expense that is incurred in a period but not paid until a future accounting period. See Example

Deferred Income

Deferred Income is where monies are received for goods or services not yet earned. See Example

Prepayments

Payment is made for service or goods which are yet to be provided and is not treated as an expense until it is. See

• Prepayments for non VAT registered organisations
• Advanced VAT Invoice (sometimes known as VAT Schedule)
• Organisation is operating the Standard VAT Scheme
• Organisation is operating the Cash Accounting VAT Scheme

Accrued Income

Accrued Income is where goods or services have been provided but payment has not been requested or received See Example

Deleting a prepayment schedule

An existing prepayment schedule can be deleted by navigating to Prepayment Schedules.

Control - Prepayment Schedules - Use the filters to locate the relevant schedule

From the Action Menu click DELETE. Any remaining scheduled items will not be posted and the schedule will be removed.

Note scheduled items that have already been recorded will NOT BE DELETED by this process. If required they will have to be deleted as individual journals. The user will still need to deal with any remaining balances on the Accrual and Deferred Income or Prepayments and Accrued Income accounts.