The Challenge
Castaway is designed around a 1-to-1 relationship between your data source accounts and elements. For many businesses, prepayments are grouped into a single balance sheet account originating from several different expense lines. While this is clean from an accounting perspective, it prevents Castaway from pulling out the detail needed to accurately model projected prepaid expenses at the element level.
Modelling: Prepayments and Accruals
The Ideal Solution
The most complete solution is to split out the prepayment balance using an Excel integration, so each prepayment balance can be mapped to its corresponding balance sheet partner element. This allows for accurate modelling and clean reporting, but involves an additional workflow that may not be necessary for most users.
The Recommended Workaround
For most users the following approach will be sufficient. In summary:
- Map the opening prepayment balance to the balance sheet partner of a dedicated prepaid cost element
- Forecast the individual prepaid expense lines as normal
- Set the reporting setting to Prepaid to group all balance sheet elements together, disregarding sign
- Collapse the Prepayments header on the balance sheet to show the net position
Steps
- Create a Cost element named 'Prepayments'.
- Set the Invoice Method to Enter Invoice.
- Set the Prepayment/(Accrual) Reporting setting to Prepaid.
- Map your prepayment balance from your data source to the balance sheet partner element created for this Cost element.
- For each expense element that has prepaid attributes, set the Invoice Method to one of the prepaid options.
- Set the Prepayment/(Accrual) Reporting setting to In Advance (Prepaid) on each of those elements.
- In your Balance Sheet report, the net position will be correct - the negative prepayments from projected expense lines will offset the opening balance from actuals. Collapse the Prepayments header to hide the detail and show only the overall net figure.
If you need any assistance please contact our support team at: support@castawayforecasting.com