How to Treat Prepaid Expenses
Business owners, entrepreneurs, your company faces expenses of all kinds, which rise to more or less substantial quantities. There is nothing more normal and reassuring! In fact, they represent the structure costs that ensure the smooth operation of your business. Taking these expenses, known in advance (as the name suggests), into consideration is thus possible and even recommended. Listing these prepaid expenses as well as their receipts constitutes a preliminary step to a proper accounting exercise. How do you gather your receipts for prepaid expenses in real-time in the most efficient way? Take notice now of easy-to-use tools in this article…
Many business expenses are prepaid. They are for purchased services or goods that are not fully consumed during the current fiscal period. As a result, they directly impact a business’s accounting and therefore the management of your budget. Taking them into account is thus essential for the purpose of financial optimization. Indeed, for some significant amounts, prepaid expenses make it possible to assign them to the following fiscal period: an accounting advantage that deserves mention. The main prepaid expenses include:
• Subscriptions (software, internet…);
• Insurance (legal liability);
• Advertisements (various advertising campaigns);
• Maintenance contracts.
All these expenses can easily be anticipated thanks to their arrangement in a centralized balance sheet table and shared by the relevant parties in the company.
Anticipate a Successful Accounting Consolidation
Depending on the nature of the prepaid expense, the charge’s initiator can be given the responsibility to register it in a collaborative tool and complete all related information. For example, they may specify the name of the supplier, the invoice and associated account numbers, the contract’s duration, the amount of the prepaid expense, and finally, the receipt that must be attached to the table (a document automatically filed, archived, and accessible to authorized users). The list thus kept up-to-date via the shared table, will facilitate the gathering of information by the accounting and financial teams.
They will be able in turn to juggle from one fiscal period to another, achieving the appropriate financial consolidations to minimize the overall expenses of the business. Communication, now more free-flowing, will allow the different teams to exchange reliable data in real-time. The information will be mapped out and listed in a single space that is accessible at any time. Gathering and then recording your prepaid expenses can have an upward effect on your earnings. However, it seems necessary to implement this operation diligently, progressively, and with the help of all the people in the business who are involved in these expenses.
In order to efficiently mobilize the teams, RowShare offers simple access, use, and above all collaborative solutions to reach goals together!
