Prepaid Expense Automation

Let me show you how you can get started with it.

First thing that you love to do is make sure that you add that review point into your close.

So right now I'm in my monthly close.

I'm going to click on new, click on task and then from the review point I'll find it.

I like prepared expense review.

I'll then fill in all other information and we'll just add that particular review point in case if you are in AI finances review plan, you will do the same thing instead of task.

It's called review point.

The rest, of the steps remain same.

Now once the prepaid expense review point is added, you have to just simply go through this instruction and then click on get started.

All right.

There are some, configuration questions that you have to answer before you start automating it.

It's pretty straightforward.

Auto entry, start date.

This is a date that you define.

From this date, Zenit will start making the expense recognition entries.

This would ideally be the date when you are actually starting out the prepared expense automation in Zenet, the threshold limit in this case, whatever amount that you define here less than that, Zenet will not consider it as a prepaid expense, which means there will be no expense recognition entry.

It will also be not added to the schedule.

Right, so that's that map the accrual account.

you just right now configure whatever accrued account that you use.

I will explain later in this video as to what exactly this means.

And then this is map prepared account, which is pretty straightforward.

So whatever prepared expense account that you want to use, then you just map it here.

Basically, whenever Zenith makes the recognition entries, it has to put it to the prepared expense account.

That is the account that you have to choose here.

So now I'm going to select accrued expenses and then I'm going to say, let's just say for the purpose of this video, I'm going to just use this date as July 1st and then activate and start entry.

auto, auto entry.

Right.

So now the prepaid expense has been automated.

Now I'm going to show you how exactly the things will work and how exactly the expense recognition entry will be done, the schedule will be created and how it reconciles.

Let me take you to the Excel file, give you an example and show you how exactly this automation works.

So I have this prepaid expense which was paid on 15th of July for $12,000.

And it is for the period starting August 2025 and ending on July 2026.

In this case, what Zenet is going to do, it's going to make the reversal entry.

It is also going to make all the expense recognition entries, including the future months.

So let me show you.

So Now I'm in QuickBooks.

let us enter the new transaction.

So let's just say it's NML insurance.

The date is 7:15.

it's for insurance expense, it's for this period and then this $12,000.

Now there are a few things which are very, very important here to note.

Zenith will not consider any expense as a prepaid expenses.

But there are some triggers.

first you have to mention like from and to, or you might just say for the period because those are some of the keywords that Zenith will understand it as a prepaid expense.

Second, it needs to be the expense, the profit and loss account.

If you directly put it to prepared expense, then Zenith is not going to do anything with that.

The third thing is the amount itself.

If the amount was, let's just say just 100 or 500, it would not do it.

Basically the threshold limit that we have just configured it, if the amount is less than that, it's not going to be considered as prepaid expense.

Right now all you do just simply click on save.

This is all you have to keep in mind.

The moment you hit save, within few seconds Zenith will start making the entries.

It will make the reversal entry where it will move the expense from the profit and loss account and put it to prepared expenses and then it will also make all the expense recognition entry.

So let me show you on balance sheet, how that looks, how that show up.

Okay, so, so there is prepared expenses balance.

When we click on this $10,000, you will then see the prepared reversal entry and you will also see the expense recognition entry there.

So this $12,000 that we see is the reversal entry because it has reversed out the expense from the insurance expense.

Put it here and then the other two entries, thousand dollar are the recognition entry.

In fact if I extend the date range, let's just say if I put it 2026, you would see all the future entries here.

Right?

And if this was the only expense, you would also see like the balance is getting zeroed out.

So what this has done is you did not have to do anything, it did all the entries for you.

Now I'm going to take you to Zenith and show you like how it has created the schedule and how it has reconciled the schedule balance as per the GL balance.

So for September, if you look at the ending balance, which is 10,000 here.

Now let's go to Zanet.

All right.

And then if I click here, I'm in September close.

If I click on prepared expense review, it will now show you the schedule.

So you see the vendor name, the amount that was, the date when it was paid, the account, it is for the amount, the period, how much is recognized, the remaining.

And you can also see the closing balance, the GL balance and the difference.

Right.

So this is how it creates the schedule.

This is how it also automatically reconciles with your books balance.

Right.

So technically you did not have to do anything here.

All you had to do was while making the original expense entry, just make sure you put the the keywords correctly.

You put it to the profit and loss account and that's it.

If the amount is more than the threshold limit, rest, everything will be done by Zenith.

All right, so this is how the prepared expense automation works.

Now you may have some prepared expenses already going on that you're already recognizing on monthly basis and you wanted to bring them here.

And this is how you do it.

All you do click on Add Schedule, provide all the information.

So let's just say the Transaction date was 1st of January.

The vendor was, let's just say slack.

the amount is dues and subscription.

The amount was, let's just say $8,000.

the start date was the whole year.

So I'm going to say January 1st, 2025.

And the end date was 12 31st, 2025.

Right.

Like once you provide all this information, you just simply click on Prepare schedule.

Let me do that.

Zenit has created the schedule based on the information that you provided.

Now there is very important thing that you have to take care.

Here is.

See, right now I'm in September, which means that I have already made the recognition entry for from January till September.

Right.

Which means that I do not want Zenet to make those entries again in my QuickBooks and then mess up everything.

So here is what I'm going to do.

I only need to select the future months for which I yet to make the entries and Zenant will just do it on my behalf.

Once I select those entries, click on Add Schedule.

After that, Zenet will add this existing, this particular prepaid expense to your schedule and it will automatically reconcile your prepared schedule balance with the GL balance.

So this is how you bring your ongoing prepared schedules.

inside Zenith.

Now, there are some few things I would like to touch base on.

Let's just say you have made the entries in QuickBooks but something was done incorrectly.

Let's just say the amount was wrong.

If you make the, if you just change the amount, it will also update the schedule and it will also make.

And it will also update the recognition entry as well.

So you'll not have to worry about it.

The second thing I would like to say, let's just say you just do not.

Let's just say this entry was an error and you just don't want it if you delete it here because this particular entry was done through Zenet.

If you delete it, what it will do is that it will delete the prepaid reversal entry, which means that it will actually remove this entry and it will also remove all the expense recognition entry from your QuickBooks as well.

QuickBooks and Xero both right.

What it will not delete is your original transaction.

So you just have to be sure about it.

All right, so that's that.

now, let me also show you, how that would show up on your finances review, like the review finding.

So now whenever you go to finances review and you are reviewing the prepared expenses, you'll also start seeing the comments.

So let us click on Run AI review now against the prepared expenses, you'll start saying that, hey, it's all good.

Your balance matches with your schedule.

I mean your schedule and GL balance both matches.

So you do not have to worry about it.

Right?

So that's pretty much it about the prepared expenses, guys.

if you imagine, overall, all you have to do now is once you bring over all of your existing schedules, it's going to be very, very smooth.

All the future expenses, as long as you make sure that you enter the amount, you enter those keywords correctly, you put it to expense account, you would never have to ever worry about making any entries, recognition entries, preparing any schedules, and reconciling it with the GL balance.

It would all be done automatically.