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I think it would be good to get the option to reconcile the ledger accounts like Prepayments and Accruals. We can mark the transactions and the corresponding reversals as cleared. So we can quickly create a schedule by filtering the uncleared transactions.
Xero should think of providing this clearing feature which is available in QBO

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I think it would be good to get the option to reconcile the ledger accounts like Prepayments and Accruals. We can mark the transactions and the corresponding reversals as cleared. So we can quickly create a schedule by filtering the uncleared transactions.
Xero should think of providing this clearing feature which is available in QBO.

When posting an invoice, why not ask in what period (drop-down calendars - to/from) the expense should be recognized? So, when I post an invoice for a 12-month subscription for £1,200, I choose 'from 1/6/25 to 31/5/26' and Xero drops £100 per month into the P&L account each month for 12 months. The prepayments schedule can then be reverse-engineered based on this.

Hey Scott

I have created a plugin specifically for this. Its called DayFive if you want to check it out its (app.DayFive.eu). I can give you a trial code to see if it fits your needs.

Basically you would raise a Purchase order as and when you know an expense is about to take place and then it will automatically create accruals, prepayments and manual journal (including all reversals and FX conversions).

That would be amazing. I only added it to important, because it is not an emergent necessity. But that would help out so much.

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One of the best ways to handle a prepayment is:
Record the bill as a prepayment. After approving the bill, open the invoice, click the Bill option, and select Repeat. Create a placeholder—refer to the attached example.

Often, line items on a supplier bill will relate to an annual period or a month/period other than the calendar month in which the invoice is dated. Manual journals must be calculated and entered to achieve an accurate month-end close for management accounts purposes at present. It would be highly effective and helpful to be able to implement a workflow in Xero whereby the period that charges relate to could be defined at a line item level on a bill, and then automatically create period adjustments (accruals or prepayments calculated based on prorated daily values) to recognise the charges on an accruals basis spread across/within the relevant monthly period(s), with a corresponding report to support the balance of accruals and prepayments at any given balance sheet date.

I have thought this for ages now. I do actually use the Fixed Assets Register to create prepayments. It's not great because you have to lie to the system and say that the prepayment is a fixed asset when setting up the chart of accounts.

When creating the asset type I use the Balance Sheet prepayment nominal ledger account as both the asset account and accumulated depreciation account. P&L depreciation expense account is the nominal ledger code such as insurance instead of depreciation code. Depreciation method - Straight Line, Averaging method - actual days and Based upon - effective life.

This works well for annual prepayments such as insurances and subscriptions but must admit I haven't sussed out a way to get it to work for say quarterly payments due to the way Xero calculates the monthly amount. The only problem with doing this, whilst it is so much quicker to post journals (it does it whilst you are posting your monthly depreciation) at the end of the year you have to "write off" the prepayment using 0.00 gain. I've found you can change the asset number so I prefix prepayments with PRE- instead of FA- and it also works for accruals after a fashion just the year end write off is a little different, but it's obviously not ideal.

On the Balance Sheet I edit the report to put the nominal ledger codes where they need to be and you can also use the depreciation schedule to create a custom report that is filtered to just select the prepayments. Just remember to create a custom depreciation schedule that only shows the fixed assets. Again though I've found whilst you can change the name of the report to Prepayments Schedule you can't change the column headings so it is showing as depreciation but you can export to excel and change the headings there.

I have one client in particular who has so many professional body subscriptions and software subscriptions it was taking me ages to do the month end journals (even using repeating journals) now it's just one click. However, it would be great if Xero could look at this and create a proper Prepayments Register and Accruals Register based on their Fixed Assets Register.

Thanks.

This is absolutely critical in my opinion. I prepay for every one of my clients and currently have to not only run manual excel reports behind the scenes to ensure accuracy but also set each prepayment up separately. This takes far too long even with the option to repeat the prepayments.

I completely agree that it should be set up in the same way as the fixed assets, however, I'm wondering if it can be included as an option on the invoicing screen rather than having to go to another place.

For example what if:
At the point of entering the invoice you have the option to choose to prepay line items on the invoice, add a start and end date and the accounts code it relates to.
All from within the invoice section.

I have tried everything available in Xero to come up with an automation for this, it simply doesn't work.
I have clients who raise dozen's of annual invoices that need to be prepaid. This would be such a game changer.

Great idea. Would help our group of companies & save a lot of time!

This would be very useful for our company as our spreadsheets are now getting very complex. Would be so much easier if it could be completed in Xero.

In other finance systems you can very easily process an invoice directly to the prepayments nominal, and then build the prepayment schedule in as well on a second screen. Ie the period for it be prepaid, how much each month and to which P&L nominal.

Is there anyway that this can be introduced into Xero as an alternative to complicated Excel spreadsheets and journals