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Jane Hodgins
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Jane Hodgins
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Jane Hodgins
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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.