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

Automate prepayments, defer prepaid costs, and spread supplier bills

Table of Contents

Step 1: Configure expense journal settings and map accounts Step 2: Select prepayments 2a- Open Select Prepayments to choose which bills to spread across future months. Use the filters to refine your view 2b - Adjust start and end date (if required) 2c - Mark items as included or excluded Step 3: Review prepayments - assign to expense accounts (if required) Identify expense accounts for supplier bills coded to prepayment accounts Review and adjust cost recognition dates Step 4: Journal prepayments That's it - you are done Related articles

This article explains the steps to setting up prepaid expenses in ScaleXP. For the full picture on using ScaleXP for expense recognition, see How to automate expense recognition journals in ScaleXP.

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

Once you have decided on the prepayment accounts to use, proceed to set up steps below.

Step 1: Configure expense journal settings and map accounts

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.

Set your default prepayment account and, if required, map between prepayment and expense accounts.

Step 2: Select prepayments

2a- Open Select Prepayments to choose which bills to spread across future months.

Use the filters to refine your view

As Spent vs IFRS/GAAP view (read more in As Spent versus IFRS / GAAP view )
Expense date range
Accounts
Included data (issued bills, bank transactions, manual bills)

ScaleXP uses text recognition to identify advance payment elements (annual software, insurance, subscriptions, and similar) and proposes start and end dates for cost recognition.

You can either
- Have ScaleXP include all identified prepayments automatically (see Journal Settings above) or
- Select each prepayment individually using the color coding as a guide.

ScaleXP uses colour coding to show the status of each row.

Blue — items included in journals. ScaleXP will spread the cost across the relevant months.
Grey - items auto-selected for inclusion in journals
Orange — items to review. ScaleXP suspects these are prepayments.
White — items expensed directly in the month the bill is received.

Note -if you take no action, grey and blue will be included, orange and white will be excluded from journals

2b - Adjust start and end date (if required)

If your cost was missing a description of the recognition period or you for some reason need to change the dates picked up automatically, you can easily do it from this page. Click on the supplier and bill to get to line level detail. Use the calendar to select the appropriate service start and end dates.

Hint: Set a threshold in Settings to hide very small amounts from the review list.

You can also use the Bills Received page to view by month. Read more in How to review bills by issue month.

2c - Mark items as included or excluded

Review the orange items, which are suggested prepayments.

Use the + button to code an item as include in journals. This can be selected for either a supplier (all invoices for that supplier), or at individual invoice level.
Use the – button to mark an item as reviewed and not included in journals. Do this at either supplier or invoice level, you choose

Click to see further detail on each expense

Costs appear at supplier level by default.
Click the down arrow by a supplier name to expand the list of invoices.
Click the pencil icon by an invoice to see line-level detail.

Select and deselect at line level or higher.

Step 3: Review prepayments - assign to expense accounts (if required)

Use Review Prepayments to select which P&L expense account to use for each supplier, bill, or line item as well as review and adjust the appropriate date range for cost recognition.

Identify expense accounts for supplier bills coded to prepayment accounts

Bills coded directly to a prepayment balance sheet account are included automatically. Use Review Prepayments to allocate them to the correct P&L expense account.

To allocate all bills from a supplier to the same account code, select that account in the Expense Account dropdown menu to the right of the supplier name.

To allocate bills from a single supplier to different expense accounts, use the downward arrow by the supplier name to show a list of invoices, then use the dropdown menus in the Expense Account column to select the required expense account for each invoice.

To allocate expense accounts at invoice line level, click on the pencil sign by each invoice to see invoice detail. Then select the appropriate expense account from the dropdown menu.