We often come across organizations that need to model Prepayments and Accruals of Income and/or Expenses. Castaway makes it easy to model these transactions, simply by modifying the invoice timing of any Sales or Costs element.  In this article, we’ll step you through modeling a basic expense prepayment.



Let’s assume we want to model an expense prepayment with:

  • Profit & Loss expenses of $5,000 per month
  • Invoices received quarterly in advance (in March, June, September, and December)
  • Invoices are paid the month after receipt (so the September invoice is paid in October)



  1. Create a Costs element in the Castaway Chart of Accounts
  2. Click on the element name to go into the Element Data Entry screen
  3. Under Invoice, set the Invoice Method to Periodic Prepaid
  4. Set the Invoice Cycle to 3 months
  5. Set the Cycle End Month to September
  6. Add $5,000 per month to the Enter Expense line
  7. Leave Days Credit at the default value of 30 days
  8. Based on the above settings, Castaway calculates an invoice every third month (including Taxes) and then pays each invoice the following month
  9. Review the Profit & Loss Report, the Balance Sheet, and the Cashflow Statement to confirm the numbers appear as you would expect

Step 3 is the most important decision point. The Invoice Method lets you choose between Prepayments or Accruals.

The different options can be surmised as follow:

Periodic Prepaid/Accrued An automatic calculation of your invoices when you have a known and consistent invoicing cycle
Enter Days Prepaid/Accrued Manual entry of the number of days that have been prepaid or accrued
Enter Prepaid/Accrued Balance Manual entry of the forecasted balance exclusive of Taxes


To model Prepayments or Accruals Income, start with a Sales element and then use the steps above.

If you require assistance, please reach out to our Customer Success team