Sage Intacct Simplifies Prepaid Expense Amortization
Accounting for the amortization of prepaid expenses is a requirement not only for big companies, but increasingly, for smaller business entities as well. For many of these companies, calculating amortization entries is a painstaking, time consuming manual process — but it doesn’t have to be. Sage Intacct has a feature that automates the process, eliminating the spreadsheets and the journal entry creation and all the double checking. Here’s a quick primer of the feature.To learn more, watch the on-demand webinar, Sage Intacct – Prepaid Expense Amortization Overview.
Watch the on-demand webinar: Sage Intacct – Prepaid Expense Amortization Overview
For those of you unfamiliar with the term, prepaid expense amortization refers to the way businesses must account for certain prepaid expenses over time. Insurance payments are a common example. Your business may pay the single annual premium in January but must amortize the prepaid expense over the coverage term. If your company pays $12,000 for an insurance policy that covers the next 12 months, then you would record a current asset of $12,000 at the time of payment to represent this prepaid amount. Then, in each month of the 12-month policy, you would recognize an expense of $1,000 and draw down the prepaid asset by this same amount.
It Doesn’t Have To Be Difficult
Many companies rely on spreadsheets to track their prepaid assets, creating monthly journal entries to move the monies around. While this can work, there’s an easier – and automatic way to amortize prepaid assets. It’s one of Sage Intacct’s free add ons — contact us to find out how to implement it.
Increase Accuracy and Save Time
You can instruct Sage Intacct to recognize pre-paid assets as you enter the initial AP invoice, even capturing amortization information such as the contract start and end dates. The application takes it from there, automatically creating journal entries for asset creation and expense amortization. Automation shortens your close process by eliminating journal entries and other manual processes; and it ensures the proper period cutoff by accounting for expenses in the correct periods.
Dimensions are one of Sage Intacct’s greatest strengths, and it makes sense to use them with prepaid expenses. You can get more granular visibility into your organization’s financial position and performance by tagging assets and expenses with dimensions such as location, department, and project. Visibility is also enhanced with the ability to drill down from the amortization schedule to view the associated journal entries and AP bills.
You’re Always in Control
You are always in control when using this Sage Intacct feature. You can set rules for how expenses should be amortized – consistently over time or all at once on a future date – then let the amortization scheduling process run. It’s just as if you were doing it yourself — except you aren’t!
Learn how easy it is to use the prepaid expense amortization add on by watching the on-demand webinar, Sage Intacct – Prepaid Expense Amortization Overview.