The Better Way to Record Prepayment Amortisation in Xero

How much time do you spend recording and monitoring amortisation of prepayments? If you want accurate accounts, there is a good chance you do it every month and would appreciate it to be faster.

When is it useful?

  • Insurance premium: usually paid annually in advance.
  • Software paid annually

What’s the trick then?

In short:

  1. Do not use Manual Journal
  2. Leverage the Xero Repeating Purchase Bill feature
  3. Automate your amortisation Schedule

Our schedules generator is available for free at the bottom on this page

1. Do not use Manual Journal

Manual Journal entries in Xero are not associated with a contact (be it supplier or client). This mean it more difficult to generate report such as schedules of prepayment amortisation.

2. Leverage the Xero Repeating Purchase Bill feature

Turning a purchase into amortisation entries takes just a few seconds:

  • From the purchase bill itself, select the ‘Repeat’ option in the top right dropdown
  • Set the Repeating Bill to be monthly, for the period you need
  • Select Approve for the amortisation to be recorded without further work from you in the following months
  • Add placeholder [Month Year] for clarity
  • Use a negative amount to credit the Prepayment account
  • Use a positive amount to debit the expense account
  • The 2 amounts offset each other, leading to no resulting payable

Look at the short video below:

3. Automate your amortisation Schedules

With such powerful way to record the amortisation, you will be able to generate schedules in seconds.

  • Export Account Transactions from Xero
  • Use the “Prepayments Amortization Schedules” Google Sheet available for free below

Do you prefer to automate further without spreadsheet?

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