Glossary and Terminology

Prepaid Expense

A prepaid expense occurs when payment is made in one fiscal year (before May 31) for expenses that are not incurred until a subsequent fiscal year (after May 31).

1. Payment is made in March for registration & airfare for a conference that is scheduled in July

2. Two years of subscription service is purchased and paid for in advance

1. If you have minor annual license, membership, or subscription that is paid for only one year at a time and renews every subsequent year, it does not have to be recognized as a prepaid expense, even if the renewal term falls within two fiscal years (i.e. January to December).

2. An expense is only considered prepaid if the payment is made in full, in advance of the new fiscal year. If receiving pro-rated invoices annually, monthly, or as work is completed, do not code as prepaid. 

3. If at any point you are uncertain of whether an expense should be coded as a prepaid, please email us at accountspayable@brynmawr.edu.

During checkout, enter the Fiscal year information in the Internal Memo field, found under “Requisition Information”.

  1. Select a handling code of “Prepaid Expenses”
  2. If the time-period of expenses spans the current fiscal year and the future fiscal year(s), perform a calculation to break down the charges.
    1. Add a second line to your invoice and indicate each fiscal year in the “Item Description” field.  Be sure to enter the correct extended amount for each fiscal year.
  3. Use the Memo field to provide any further details to Accounts Payable
  4. Be sure your invoice shows the relevant fiscal year dates or attach documentation to support your calculations and reasoning for marking this as prepaid.
  1. Indicate the Fiscal year in both memo fields. The expense report header and each expense item memo.
  2. Enter the budget Worktags where this should be charged in the upcoming fiscal year.
  3. As you select Travel Expense items, be sure to enter the dates (event date, departure date, arrival date) with the accurate dates of travel. These dates will indicate in which fiscal year the travel expense is incurred.
    1. Initially, the current year budget will be charged and a journal entry will be created to reallocate the expense to the next year.

Contact us at accountspayable@brynmawr.edu for assistance with prepaid expenses. Thank you!