Setting up Prepayments and Accruals in Sage 50

With its highly effective and automated payment module, Sage 50 has played a vital tool for all businesses, large and small. However, as per the feedback received from a section of Sage 50 users, there are some accounts-related features they often find difficult to use. Some of them have informed that they are not quite aware of how to set up payments and accruals in Sage 50. In this blog; we will look at what payments and accruals are and how to set them up in Sage 50.

What are Prepayments?

A prepayment is used to adjust accounts for payments made before receiving the benefit. Examples of prepayments include:

• Rent paid in advance
• Insurance premiums
• Legal retainer fees.

What are Accruals?

An accrual is used to adjust accounts for payments made in arrears. Examples of accruals include:

• Taxes incurred but not paid yet
• Utility charges.
• Interest incurred but not paid yet
• Wages owed but not paid.
• Other services or goods received but yet to be invoiced.

Usually, an accrual is an estimate depending on previous payments. This is because we do not normally know in advance the exact amount of this future payment.

How to Setup Prepayments?

 Here are the steps to follow-

• Go to Nominal codes 
• Click on the Prepayments section
• The prepayment window will come up
• Enter the relevant details as mentioned below, to record the prepayment
  • N/C- Nominal code ( monthly rent, for example)
  • Details- Details of the rent
  • Department- the name of the department. The default value is 0
  • Fund- available only if the charities option is enabled
  • Prepayment N/C- automatically updated
  • Months- number of months for prepayment. It can vary between 2 and 12
  • Posted- automatically updated
  • Monthly amount- automatically updated

• Click on Save
• Click Ok

The prepayment has been created now. It will be processed when you will run the month-end routine next time and will mark the prepayment check box.

How to Setup Accruals?

Here are the steps to follow-

• Go to Nominal codes 
• Click on the Accruals section
• The prepayment window will come up
• Enter the relevant details as mentioned below, to record the accrual
  • N/C- Nominal code (electricity, for example)
  • Details- description of the accrual
  • Department- the name of the department, if needed
  • Fund- available only if the charities option is enabled
  • Accrual N/C- automatically updated
  • Value- Net accrual value
  • Months- number of months for accrual. It can vary between 2 and 12
  • Posted- automatically updated
  • Monthly amount- automatically updated

• Click on Save
• Click Ok

The accrual has been created now. It will be processed when you will run the month-end routine next time and will mark the accrual check box.

In the sections above, we have discussed a step-by-step procedure to set up payments and accruals in Sage 50. If you are still having any issues in implementing the steps mentioned above or if you have any more queries, you may consult 1800 964 3096 with some of the authorized Sage experts.

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