Accruals and Prepayments

Cash Accounting vs. Accruals Accounting

Clubtreasurer uses a modified cash accounting system by default, which suits the needs of most small clubs and community organisations.

What is Cash Accounting?

With cash accounting, you only record income or expenses when money is actually received or paid out. For most clubs, simply using Receipts and Payments to track money moving in and out is all that’s needed.

What is Accruals Accounting?

Some organisations prefer to use accruals accounting to get a more accurate picture of their financial position by matching income and expenses to the period they relate to, rather than when the cash is exchanged.

Prepayments = Money paid or received in advance, for goods or services that relate to a future period.
Accruals = Money owed or due (costs or income that have occurred but not yet paid or received).

Example:

Club A receives new kit on 1st January but pays the supplier on 5th February.
- Cash Accounting: Records the payment in February (when cash leaves the bank).
- Accruals Accounting: Records the cost in January (when the kit is used), and shows the payment in February as a reduction in the outstanding liability.

Recording Accruals & Prepayments in Clubtreasurer

Clubtreasurer supports both simple and advanced accrual/prepayment entries.

Before You Start

If you’re adding entries for a past financial year, you’ll need to temporarily change your financial year setting under: Setup > Organisation

Simple Accruals & Prepayments

Clubtreasurer includes special accounts called *DEBTORS and *CREDITORS to help you track:

Debtors (money owed to you)
Creditors (money your club owes)

You can also create your own Debtor or Creditor accounts if needed.

How it works

Create normal Receipt/Payment entries using the *DEBTORS or *CREDITORS account.
These entries will show up as Current Assets (Debtors) or Current Liabilities (Creditors) on your Balance Sheet.
When the cash is actually received or paid, use Clubtreasurer’s Reverse feature to cancel the original entry and record the real transaction with the correct date and bank account.

*See Receipts & Payments help page for how to reverse transactions.

1: Expense Accruals (Cost incurred now, paid later)

Scenario: You need to accrue for £100 food & drink costs that were incurred in January, but not yet paid. The expense should appear on the P&L in January and show a liability (creditor) balance for the accrual in the Balance Sheet. In February, the expenses are paid to the supplier and the liability is reversed and cash/bank balance is reduced.

Step 1: (January): record the Expense Accrual by creating a new Payment transaction against your Creditor A/c when occurred.

Your January P&L will now show a £100 charge against Food & Drink Expenses, and the Creditor balance will show under liabilities in your Balance Sheet:

	Date			Receipt/Payment & Cost Code		Account	Amount
	10-Jan			Payment – Food & Drink Expenses		Creditor A/c	£100

Step 2: (February): when the supplier is paid:
- 2.1: Open and Reverse the original January Expense Accrual Payment transaction (Use the “Reverse” button):

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Feb			Payment – Food & Drink Expenses		Creditor A/c	– £100

2.2: Create (or Import) a new Payment transaction against your Bank A/c. Note this cancels out the Food & Drink Expense so it correctly shows as zero on your P&L in February. The liability balance is also cancelled out and the Bank A/c balance now shows the cash has been paid out.

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Feb			Payment – Food & Drink Expenses		Bank A/c	£100

If your accrual from Step 1. was included in an opening creditor balance and no actual transaction exists then you can combine Steps 2.1 and 2.2. into an Account Transfer:
– FROM the Cash/Bank Account the accrual was paid out of
– TO the Creditor Account.

2: Revenue Accruals (Income due now, paid later)

Scenario: Membership fees for John Smith are due in January for £50. You need to recognise the membership income in your January P&L, but as John has not yet paid these you must show this as a Debtor balance in your Balance Sheet. John pays his membership late in March and you now need to remove the Debtor balance and record the cash received into your Bank A/c.

Step 1: (January): record the Receipt Accrual transaction by creating a new Receipt transaction against your Debtor A/c when the membership is due:

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Jan			Receipt – Membership Receipts		Debtor A/c	£50

Step 2: (March): when John pays:
- 2.1: Open the original January Receipt Accrual transaction and create a reversing transaction (click Reverse button).

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Mar			Receipt – Membership Receipts		Debtor A/c	– £50

2.2: Create (or Import) a new Receipt transaction against your Bank A/c:

	Date			Receipt/Payment & Cost Code		Account	Amount
	15-Mar			Receipt – Membership Receipts		Bank A/c	£50

3: Expense Prepayments (Paid now, incurred later)

Scenario: You have paid for £100 Rental Costs in advance in January but they will not be incurred until February. This should be reflected in the Bank A/c and Debtors balances in January Balance Sheet, but the expense should not show in the P&L until February. Also, the Debtor balance should be cleared in February.

Choose one of the Methods below for Expense Prepayments.

Expense Prepayments – Method 1

You must use Method 1 if you import your bank statements via the Transaction Import process.

Step 1: (January):
- 1.1: Create a normal Payment transaction to record the payment made from your bank account:

	Date			Receipt/Payment & Cost Code		Account	Amount
	15-Jan			Payment – Rental Costs		Bank A/c	£100

1.2: Create an equivalent Expense Prepayment (Payment) transaction with the same Date and Cost Code, but select a Debtor A/c and, importantly, enter a negative value £-100 (minus £100)

	Date			Receipt/Payment & Cost Code		Account	Amount
	15-Jan			Payment – Rental Costs		Debtor A/c	– £100

Step 2: (February): open and Reverse the January Expense Prepayment transaction:

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Feb			Payment – Rental Costs		Debtor A/c	£100

Expense Prepayments – Method 2

Method 2 cannot be used if you create your transactions using the Transaction Import process.

Step 1: (January): create an Account Transfer transaction from Bank A/c to Debtor A/c when the expense is paid.

	Date			Account Transfer From		Account Transfer To	Amount
	15-Jan			Bank A/c		Debtor A/c	£120

Step 2: (February): when the expense is incurred create Payment transaction from Debtor A/c

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Feb			Payment – Rental Costs		Debtor A/c	£120*

If you need to spread the prepaid cost over a number of periods – for example you have paid an annual rental expense and need to charge 1/12th cost to each month throughout the year – then you would repeat Step 2 for every month of your year and charge £10 (£120/12) to each month (or whatever portion is required). As you move through the year your Debtor balance will reduce to zero on the final month.

4: Revenue Prepayments / Deferred Income
(Received early)

Scenario: In December, you received £250 in advanced Membership payments due in January. You need to record the advanced payment into your Bank A/c as well as in your Creditor A/c to reflect the liability. In January you can recognise the payment in your P&L and clear the liability balance.

Choose one of the Methods below for Revenue Prepayments.

Revenue Prepayments / Deferred Income – Method 1

You must use Method 1 if you import your bank statements via the Transaction Import process.

Step 1: (December):

1.1: create or import a Receipt transaction to record the advance membership payment(s) made into your bank account:

	Date			Receipt/Payment & Cost Code		Account	Amount
	20-Dec			Receipt – Membership Income		Bank A/c	£250

1.2: then, create an equivalent Revenue Prepayment (Receipt) transaction with the same Date and Cost Code, but select a Creditor A/c and, importantly, enter a negative value £-250 (minus £250)

	Date			Receipt/Payment & Cost Code		Account	Amount
	20-Dec			Receipt – Membership Income		Creditor A/c	– £250

Step 2: In January, open and Reverse the December Revenue Prepayment transaction:

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Jan			Receipt – Membership Income		Creditor A/c	£250

Revenue Prepayments / Deferred Income – Method 2

Method 2 cannot be used if you create your transactions using the Transaction Import process.

Step 1: (December): create an Account Transfer transaction from Creditor A/c to Bank A/c when monies are received.

	Date			Account Transfer From		Account Transfer To	Amount
	20-Dec			Creditor A/c		Bank A/c	£250

Step 2: (January): create a Receipt transaction for the Membership payment against Creditor A/c when the event is run.

	Date			Receipt/Payment & Cost Code		Account	Amount
	1-Jan			Receipt – Membership Income		Creditor A/c	£250

Adding Opening Accruals & Prepayment Balances

You can add opening balances for accruals and prepayments directly into your Debtor or Creditor accounts using Clubtreasurer’s simple accruals method.

Adding Opening Balances (at setup)

Step 1:
Go to your Debtor or Creditor account and enter the relevant opening balance.

Use Debtors for prepayments or income owed to you.
Use Creditors for expenses incurred but not yet paid.

Step 2:
When the actual payment is made later, simply create an Account Transfer:

From: Your Cash/Bank Account
To: The Creditor Account

This cancels the brought-forward balance and reflects the outgoing cash movement.

No need to create a Payment or Receipt transaction — these were already recorded in the previous financial year and shouldn’t affect the current Profit & Loss account.

Adding Opening Balances Retrospectively

If you forgot to include opening accruals or prepayments when first setting up your accounts, you can still add them later. Here’s how:

Step 1: Temporarily Adjust the Financial Year

Change your Financial Year-End to a date before the opening balance date.
Go to: Setup > Organisation & Subscription
This lets you edit accounts that may otherwise be “locked” due to age.

Step 2: Enter Opening Balances

Open your Debtor or Creditor account and enter the correct opening balance.

Step 3: Adjust the Current Year

If you’ve already recorded a Receipt or Payment this year for a transaction that actually belongs to a previous year:

Example: Expense Accrual (Creditor A/c)

3.1 Delete the Payment made from your bank account this year.

This expense was from the prior year, so it shouldn’t appear in this year’s Profit & Loss.

3.2 Instead, create an Account Transfer:

From: Your Bank Account
To: The Creditor Account

This clears the opening balance and reflects the cash movement correctly — without affecting this year’s income or expenses.

Account Transfers affect your Balance Sheet but not your Profit & Loss.

Advanced Accruals & Prepayments (BETA)

This feature is currently under a beta programme. Please raise a Support Ticket if you would like access to this.

You can also manage more complex accruals or prepayments that follows the accounting ‘matching principle’. This determines when income and expenditure should hit your P&L account and Balance Sheet.

Click the “Full Screen” icon below to expand. Space bar or Enter to move slides.

Accounting for Funds held on behalf of Members for 3rd-Party Purchases

Scenario: Your club provides a free service to allow members to purchase club kit. The club collects kit orders and monies on behalf of its members, and places bulk orders to the kit supplier. Importantly, the club is only facilitating the ordering process; it therefore needs to record the member receipts into its bank account as liabilities/creditors and importantly does NOT want to show the supplier payments in its P&L account as they are not club transactions.

When kit monies are collected from members, create Account Transfer transactions from Creditor A/c to Bank A/c. If you have already entered or imported these as a normal Receipt Transactions you can bulk convert them into an Account Transfer – see below
- Dr Bank A/c (BS)
- Cr Creditor A/c (BS)
When suppliers purchases made just create an opposite Account Transfer transactions from Bank A/c to Creditor A/c. If you have already entered or imported these as a normal Receipt Transactions you can bulk convert them into an Account Transfer – see below
- Dr Creditor A/c (BS)
- Cr Bank A/c (BS)