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Hi,
What's the best way to record a pre-paid expense?
We are a travel company and have some large expenses we have to pre-pay but don't receive the service until later.
E.g. hotel deposits we sometimes have to pay 6 months before the stay occurs.
I'd like to record the expense as a pre-payment and then recognise the expense in the quarter it actually occurs.
Is there an easy way to do this?
Thanks,
You've come to the right place, Philippa1.
We can create a holding account to record the pre-payment expenses. Then, create a service item called Retainer that is tied up to the holding/liability account. Here's how:
To create a holding/liability account:
To create a retainer item:
As we bill for services, we can use the invoice and bill them for the service. You can learn additional information on how to record a retainer in this article: Record a retainer or deposit.
Using the instructions above, we're able to record the pre-paid expenses in QBO.
Feel free to visit us again if you have any other concerns.
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