--- title: Prepaid Expenses description:   --- [Skip to content](https://help.planguru.com/knowledge/planguru-app-online/prepaid-expenses#main-content) [![PlanGuru Help Center](https://help.planguru.com/hs-fs/hubfs/logo_PlanGuru_helpcenter.png?width=360&height=50&name=logo_PlanGuru_helpcenter.png)](https://help.planguru.com/knowledge?hsLang=en) - [Your Tickets](https://help.planguru.com/tickets-view) - [Sign out](https://help.planguru.com/_hcms/mem/logout) Open main navigation Close main navigation - [Your Tickets](https://help.planguru.com/tickets-view) - [Sign out](https://help.planguru.com/_hcms/mem/logout) - [Submit a Ticket](https://help.planguru.com/tickets-view/new) [Submit a Ticket](https://help.planguru.com/tickets-view/new?hsLang=en) Hello. What do you need help with? - There are no suggestions because the search field is empty. 1. [Help Center](https://help.planguru.com/knowledge?hsLang=en) 2. [PlanGuru App (Online)](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en) 3. [Forecasting & Modeling](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#forecasting-modeling) # Prepaid Expenses ## The Prepaid Expenses projection method allows you to easily forecast balances for prepaid accounts — such as insurance, rent, or service contracts — and automatically amortize them as the related expenses are recognized.   This method is available for accounts within the **Current Assets** section of your Balance Sheet that are assigned the **Other Current Assets** account type. It enables you to: - Record **additions** to prepaid accounts when payments are made. - Automatically **amortize** those prepayments as the underlying expense is recognized. - Maintain accurate timing of both **cash outflows** and **expense recognition** across periods. --- ### When to Use This Method Use the **Prepaid Expenses** projection method when: - You pay for goods or services in advance (e.g., annual insurance, rent, software subscriptions). - You want to automatically amortize those payments over time as expenses are recognized. - You need your **Balance Sheet**, **Income Statement**, and **Cash Flow Statement** to stay perfectly synchronized. --- ### Applying the Method #### **Step 1 – Open the Prepaid Expense Account** Navigate to the **Current Assets** section of your Balance Sheet. Double-click the prepaid account (e.g., Prepaid Insurance), or right-click and select **Edit**. ![Prepaid Expense](https://help.planguru.com/hs-fs/hubfs/Prepaid%20Expense.png?width=670&height=349&name=Prepaid%20Expense.png) --- #### **Step 2 – Link to the Expense Account(s)** In the setup window, select which **Expense Account(s)** should reduce the prepaid balance as they are recognized. - Check one or more expense accounts from the list on the right (e.g., Insurance Expense). - You can also link to a **non-financial assumption line** if using more advanced amortization logic. ![Select Accounts](https://help.planguru.com/hs-fs/hubfs/Select%20Accounts.png?width=670&height=242&name=Select%20Accounts.png) --- #### **Step 3 – Schedule Additions to the Prepaid Account** In the grid below, enter the **months and amounts** when new prepayments will occur. If forecasting multiple years, make sure you enter additions in the appropriate month for each year. ![Enter Addistions](https://help.planguru.com/hs-fs/hubfs/Enter%20Addistions.png?width=670&height=125&name=Enter%20Addistions.png) **Example:** You pay **$12,000** each January for annual insurance coverage. - Add $12,000 in January of each projected year. - Link to the **Insurance Expense** account that amortizes $1,000 per month. After saving, PlanGuru will automatically: - Increase the prepaid balance in January by $12,000. - Reduce the balance monthly as the $1,000 insurance expense is recognized. ![Insurance IS](https://help.planguru.com/hs-fs/hubfs/Insurance%20IS.png?width=670&height=24&name=Insurance%20IS.png) --- ### Reviewing the Results After applying the method: - The **Prepaid Expense account** will show rising balances when payments are made. - The **linked expense account** will show even monthly recognition (e.g., $1,000/month). - The **Cash Flow Statement** will reflect the payment timing accurately.   ![Prepaid Insurance 2](https://help.planguru.com/hs-fs/hubfs/Prepaid%20Insurance%202.png?width=670&height=36&name=Prepaid%20Insurance%202.png) --- ### 5️⃣ Advanced Options - You can **link multiple expenses** to a single prepaid account (e.g., insurance, maintenance, and software subscriptions). - You can also **link to assumptions or KPIs** for custom amortization schedules (e.g., variable usage-based prepaids). - [PlanGuru App (Online)](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#main-content) - [Getting Started](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#getting-started) - [Setup & Import](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#setup-import) - [Company Management](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#company-management) - [Forecasting & Modeling](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#forecasting-modeling) - [PlanGuru Analytics (powered by Reach Reporting)](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#planguru-analytics-powered-by-reach-reporting) - [Standard Reports](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#standard-reports) - [Updates](https://help.planguru.com/knowledge/planguru-app-online?hsLang=en#updates) - [PlanGuru Desktop (Windows)](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#main-content) - [Updates](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#updates) - [Getting Started](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#getting-started) - [Navigating PlanGuru Desktop](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#navigating-planguru-desktop) - [Setup & Maintenance](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#setup-maintenance) - [QuickBooks Online Import](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#quickbooks-online-import) - [QuickBooks Desktop Import](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#quickbooks-desktop-import) - [Excel Import](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#excel-import) - [Analysis Setup](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#analysis-setup) - [Forecasting & Modeling](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#forecasting-modeling) - [Installation](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#installation) - [Licensing](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#licensing) - [Managing your PlanGuru Files](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#managing-your-planguru-files) - [Reporting](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#reporting) - [PlanGuru Analytics](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#planguru-analytics) - [Technical Inquiries](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#technical-inquiries) - [PlanGuru Desktop in Cloud Hosting](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#planguru-desktop-in-cloud-hosting) - [Advanced Reporting Excel Add-in](https://help.planguru.com/knowledge/planguru-desktop-windows?hsLang=en#advanced-reporting-excel-add-in) - [PlanGuru University](https://help.planguru.com/knowledge/planguru-university?hsLang=en) - [PRODUCTS & PRICING](https://www.planguru.com/products/) - CUSTOMERS - [Small Businesses](https://www.planguru.com/users/small-business/) - [Nonprofits](https://www.planguru.com/users/nonprofit/) - [Accountants / Advisors](https://www.planguru.com/users/accountants-business-advisors/) - LEARNING - [Attend a Live Demo](https://www.planguru.com/products/planguru-webinar-signup/) - [PlanGuru University](https://www.planguru.com/planguru-university/) - [Sign Up for PGU](https://www.planguru.com/planguru-university/) - [PGU Class Materials & Recordings](https://www.planguru.com/planguru-university/class-materials/) - [Video Tutorials](https://www.planguru.com/learning-resources/learning-center/) - [Help Center](https://help.planguru.com/knowledge) - SUPPORT - [Help Center/ Submit a Ticket](https://help.planguru.com/knowledge) - [Downloads / Updates](https://www.planguru.com/support/downloads/) - [Try it FREE](https://www.planguru.com/products/trial/) [![logo\_PlanGuru\_190-1](https://help.planguru.com/hs-fs/hubfs/logo_PlanGuru_190-1.png?width=190&height=55&name=logo_PlanGuru_190-1.png "logo_PlanGuru_190-1")](https://www.planguru.com/) Copyright © 2025, PlanGuru