This article walks you through ScaleXP’s four-step expense recognition workflow. It enables you to spread prepaid costs over the months they relate to, identify and post accruals for bills not yet received, automatically release those accruals when bills arrive, and post the resulting journals to your accounting system — all from the Journals tab.

Note: In consolidated companies, expense recognition must be done at the subsidiary level, in line with the accounting connection.

Getting started

For best practice in quickly setting up ScaleXP prepaid expenses, we recommend setting up a new prepaid expenses account as described in this article: Prepaid Expenses:  Best Practices and Quick Start Guide 

Before you can create your journals, you need to set some basic parameters.

Open any expense journal page from the Journals tab (click on the box next to the page name). 

Use the three dots at the top right of the page to navigate to Expense Journal Settings.  

See How to set and change expense journal settings. 

Step 1: Identify and spread prepayments across future months

See details on these steps in  How to Automate Prepaid Expenses: Setting up Prepaid Expenses in ScaleXP 

1a: Select prepayments

Open Select Prepayments to choose which bills to spread across future months. 

1b: Review prepayments

If bills are coded directly to a prepayment balance sheet account, use Review Prepayments to allocate line items to the correct expense accounts before posting. 

Review Prepayments  and assign expense accounts if required.

Step 2: Post the prepayment journal

Open the Prepayments Journal to see the financial impact of the prepayments you selected in Step 1, and post the journal to your accounting system.

Each month ScaleXP automatically creates journals that:

• move the prepaid element of each bill to a prepayment asset account, and
• recognise the cost in the months the service relates to.

For full detail, see How to automate your prepaid expense journal: Prepayments Journal report.

Step 3: Identify missing costs - review suggestions and add accruals

Open the Add Accruals page to handle accruals separately from prepayments. ScaleXP uses pattern recognition to identify missing supplier bills and suggest accruals, and you can also add your own.

Filters at the top of the page control:

• As Spent vs IFRS/GAAP view
• Expense date range
• Accounts
• Included data (issued bills, bank transactions, draft bills (Xero only), manual accruals)

To add your own accrual or edit a suggestion, see How to add cost accruals.

Note: Accruals release automatically once an associated bill arrives or a pre-set release date is reached. You can also release accruals manually if they are no longer required.

Step 4: Post the accrued cost journal

Go to the Release Accruals section to review your accrual additions and releases

• You’ll see accruals you have added manually as well as any back-dated costs from bills you included in Step 1.
• Release any manual accruals that are no longer required - accruals for bills received are released automatically

Go to Journal Accruals to post your journal.

For full detail, see How to automate accrued cost journals.

That's it - you have completed your expense journals

You’ve now reviewed and posted both your prepayments and accruals for the period. 

Next month ScaleXP will pre-populate the workflow with new bills and suggested accruals, so you just review the changes and post and accruals release automatically as matching bills arrive.

Related articles

Prepaid Expenses:  Best Practices and Quick Start Guide 

How to Automate Prepaid Expenses: Setting up Prepaid Expenses in ScaleXP 

How to Automate Your Prepaid Expense Journal:  Review and Post the Prepayments Journal 

How to Automate Accrued Cost Journals 

How to Review Bills by Issue Month 

As Spent versus IFRS / GAAP view 

How to Add a Missing Bill or Cost Supplier 

How to Set and Change Expense Journal Settings