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

If you prefer to continue using your existing account set ups and are comfortable reconciling differences between the old and new methodologies, then see the below setup guide.

The video below provides an overview of how to set up Prepaid Expenses in ScaleXP:

To set up automated prepaid expenses, first go to the "Journals" tab (menu at top of page), select the first step of "Prepaid Expenses," then follow these simple setup steps:

Set accounts

First, choose where bills are initially coded in your accounting system: Income Statement or Balance Sheet (or both)

When you first open the Prepaid Expenses page, it will ask you where prepaid bills are coded in your accounting system. 

You can set up accounts anytime using the cog symbol at the top right of any of the the Prepaid Expenses pages. Journals>Prepaid Expenses>cog (top right)>Prepaid expense settings.

You have 3 options:

• 1.Profit & Loss (expense accounts) – if you code bills directly to the income statement expense account
• 2.Balance Sheet Prepayment account(s) – if you code bills directly to one or more prepayment balance sheet accounts
• 3.Profit & Loss & Balance Sheet – if you have some bills in each of the two categories above, then select the third option.

Select the option that matches your current accounting practices. This will reveal the appropriate next steps in setting up ScaleXP.

If you select Profit & Loss, you will be asked to set a few more parameters:

• Prepayment threshold – this is to avoid ScaleXP proposing allocation of very small bills which are not material prepayments – set that threshold here
• default Prepayments balance sheet account – this sets the default balance sheet account to which prepaid expenses will be allocated in the proposed journal
• Map Accounts, for other prepayment accounts – if you use more than one prepayment account for expenses initially coded to the income statement, set the mapping rules here.

Note that once you set a default prepayment account, you will need to contact support to change it.  You can, however, add additional prepayment accounts at any time.

If you select Balance Sheet, you will be asked to select all balance sheet accounts used for prepayments. 

Whichever settings you choose, once your accounts are set and mapped, use the blue Save button to Save and exit Settings.

Step 2: Bills Coded to P&L

After you save your settings, if you have selected Profit & Loss for coding bills, you will be taken to Bills coded to P&L. You can also go to this report at any time from the left sidebar of the Prepaid Expenses page.

Use this report to select your prepaid bills from all bills in all expense accounts and to review and adjust your cost recognition dates. 

Identifying prepaid bills

The Bills coded to P&L report shows all bills synced with ScaleXP which fall within the dates and accounts selected in the filters at the top right of the page.

The bills are grouped by supplier name.

Use the colour coding to help you decide which items to review.

• Orange items are to review: ScaleXP has identified that these items might be prepayments.
• Blue items are marked as prepayments. The system will automatically spread cost for these items over the relevant months.
• White items are being expensed directly.

Use the + button to code an item as a prepayment. 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 a prepayment. Do this at either supplier or invoice level, you choose

To view and select at invoice line level, use the downward arrow by the supplier name to reveal the list of invoices. Click on the pencil for the invoice you need. This will reveal the invoice line level detail.

Hint: Once all items have been reviewed and marked, none will be orange — they will all be either white (not included in prepayments) or blue (included in prepayments).

Reviewing and adjusting cost recognition dates

This is done at invoice line level.

Use the pencil to see invoice and date range detail and select the appropriate date range.  Choose the appropriate service start and end dates to be used for recognising the expense. 

Hint: You can use the threshold (in Settings) to prevent the system from showing very small amounts for review.

Step 2: Bills coded to Balance Sheet

After saving your settings, if you have selected Balance Sheet, you will be taken to Bills coded to Balance Sheet. You can also select this report at any time using the report in the left sidebar.

Use this report 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.

Identifying expense accounts for supplier bills coded to prepayment accounts

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.

Reviewing and adjusting cost recognition dates

To review and edit cost allocation dates, view invoice detail using the steps above. Then click on the start and end dates to change if required.

Prepayments Journal

Go to the Prepayments Journal to see the financial impact on your accounts and post your journal.

For more information on the prepayments journal see How to automate your prepaid expense journal:  Prepayments Journal report 

Download options

Use the Three dots at the top right>Download this page in Excel) to download into Excel the same level of detail you seen on your screen.

You can also download all Bills (whether prepayments or not), including line level detail, using the Download Bills option in the same three dots menu at the top right.

Use the Three dots at the top right>Download this page in Excel) to download into Excel the same level of detail you seen on your screen.

Hint: Download and save in Excel to  keep a record of the detail you are using for your journals.

Other helpful hints

How to add a missing bill or cost supplier 

If you need to change the designated prepayment accounts or prepayment threshold, go back to Set accounts (top of left sidebar).   

To adjust dates, go back to Step 1, Bills coded to P&L and/or Bills Coded to Balance Sheet.