Understanding and Automating Prepaid Expenses on Tyms

Prepayments in sales and expenses refer to the practice of paying for goods or services in advance before they are actually delivered or consumed. These prepayments can impact a company's financial statements and accounting practices in the following ways:

Prepaid expenses refer to payments made in advance for goods or services that will be received or consumed over time: such as rent, subscriptions, or insurance. These types of expenses are recorded as assets on your balance sheet because the value has not yet been fully utilized.

As the periods pass and the services are consumed, a portion of the prepaid amount is recognized as an expense in your financial reports. For example, if you pay ₦120,000 for a 12-month rent, Tyms allows you to record this once and automatically spread the expense over the 12-month period.

With Tyms, you can effortlessly handle prepaid expenses using a specialized module designed to automate the process of recognition and ensure accurate monthly reporting.

Here is a brief guide on how to record prepaid expenses on Tyms: 

1. Navigate to the Prepaid Expenses Module
   • Go to the Expenses section on the Tyms dashboard.
   • Click on Prepaid Expenses.
2. Create a New Prepaid Expense
   • Click the "New" button to create a new entry.
3. Fill in the Expense Details
   • Enter all relevant information just like you would for a normal expense: Record expenses for this specific transaction.
4. Select the Prepaid Account
   • Under the Account Category section, select the appropriate Prepaid Account (e.g., Prepaid Rent, Prepaid Insurance).
   • This ensures the payment is recorded as an asset, not an immediate expense.
5. Set the  Months (Prepaid Duration)
   • Input the number of months the expense will be spread across (e.g., 12 months).
   • Tyms will automatically recognize and expense the amount monthly.
6. Set the Start and Due Dates
   • Choose the start date (when the expense begins to apply).
   • Set the due date (if applicable).
7. Add Items or Services
   • List out the goods or services covered by the prepayment.
8. Review and Save
   • Double-check all inputs for accuracy.
   • Click "Save" to complete the recording: Save as Draft: For later editing, Save as Published: Finalizes the bill entry.

Your prepaid expense will now appear in the Prepaid Expenses Table, and you can always preview, duplicate or delete it as needed.