Forget the manual spreadsheets and complex monthly journal entries. Puzzle is designed to handle the "matching principle" for you, ensuring your large upfront payments (like annual software or insurance) are spread across the months you actually use them—without disrupting your cash-basis reporting.
1. Identifying the Prepaid Transaction
In Puzzle, prepaid management lives on the Expenses page under the Prepaid Expense tab.
Starting a Prepaid Expense: To start, click "+ Add prepaid expense" in the top right.
Two Ways to Add:
From transaction: Choose a transaction already synced from your integrated bank or credit card accounts.
Manual: If the expense isn't associated with a specific bill or doesn't appear in the list, you can manually input the amount and date.
Important Note: The Prepaid Expense tab only lists transactions, not bills. If you are working off a bill that hasn't been paid yet, you'll need to use the manual schedule option once the payment is made.
2. Creating the Amortization Schedule
Once you’ve located or entered the transaction, click "Create Schedule" to define how the expense hits your books.
Start Date vs. Transaction Date: These are often different. If you pay for a software renewal in November, but the new contract doesn't start until January, your Start Date is January.
Duration: Enter the length of time the expense covers (e.g., 6 months, 12 months). You can find this on your vendor invoice or receipt.
Recognition Type: Choose the expense account where the monthly "slices" should be recorded.
No Duplicates: Don't worry about double-counting; Puzzle reclassifies the existing expense rather than creating a second one, keeping your financial reporting accurate.
If from a transaction, this is what it looks like: 👇
If you're making a manual Prepaid Expense, this is what it looks like: 👇
3. Monitoring and Managing Schedules
You can track the status of all your prepayments within the Prepaid Expense tab.
Summary View: See a list of individual schedules and their current status.
Asset Rollforward: Toggle to this view to see your prepaid expenses grouped by Type. You can click into any type for a deeper dive into the data.
The "No Edit" Rule: Once a schedule is submitted and finalized, it cannot be edited.
How to Fix Errors (Voiding): If you make a mistake, click the three dots (...) on the far right of the transaction and select "Void." * 📓: Once voided, that specific transaction is no longer available. You will need to use the "Manual Schedule" option to recreate the schedule with the correct details.
Key Differences: Prepaids vs. Fixed Assets
While both involve spreading costs over time, Puzzle treats them differently to match accounting standards:
Feature | Prepaid Expenses (e.g., Rent/SaaS) | Fixed Assets (e.g., Laptops/Desks) |
Account Type | Reduces the Asset account directly each month. | Uses a "Contra-Asset" (Accumulated Depreciation). |
Duration | Usually consumed within 12 months. | Usually lasts 3+ years. |
Adjustments | Cannot be edited; must be voided and recreated. | Can be paused or stopped as needed. |
Pro-Tips for Accuracy
Unlocked Periods: If you are setting up a schedule with a start date in the past, ensure those accounting periods are unlocked so Puzzle can post the "catch-up" entries.
Manual Accuracy: Using a manual schedule does not create duplicate journal entries—it simply reclassifies the existing movement of funds to ensure your accrual books are correct.
Check the Invoice: Always verify the "Service Period" on your receipt before hitting submit, as you'll have to void the whole thing if the dates are wrong!
FAQs
Q: What types of transactions should be classified as prepaids?
A: Prepaid expenses are any transactions that you have made and will receive a future benefit from. An example would be paying $120 for an annual magazine subscription. You should recognize an expense of $10 a month for 12 months, or each month you receive a magazine. This follows the accrual method of accounting where expenses are recognized in the period they are incurred.
Q: How do I record a prepaid transaction in Puzzle?
A: To record a transaction as a prepaid, go to the Prepaid tab on the Accounting page and select “New Expense” on the top right. From there, you will be able to either select an existing transaction from one of your integrated accounts, or manually add a transaction. Additionally, note that only transactions, and not bills, are listed under the Prepaid tab on the Accounting page. If your expense is not associated with a bill or does not appear in the transaction list, you can create a manual prepaid schedule. The manual schedule allows you to input the amount and date to match the original expense, without duplicating journal entries.
Q: How do I create the prepaid amortization schedule?
A: After you have located the prepaid transaction, select “Create Schedule” and input the required information like recognition type and start date.
Q: What information do I need to know to properly account for a prepaid transaction?
A: You will need to know the start date of the expense to ensure the expense is recognized in the proper period. Note, this will be different from the transaction date. An example would be renewing a software subscription in November, with the new contract starting in January. The start date would be January.
You will also need to know the length of time the expense covers. Is it 1 month? 6 months? A year? This information can be found either on the invoice or the receipt from the vendor.
You will add this information to the “Create Schedule” pop up.
Q: Can I make changes to the prepaid schedule after I submit it?
A: No, once prepaid schedules are submitted and finalized, they cannot be edited or changed. They can be voided, and you can recreate a new schedule for that expense.
Q: How do I void a prepaid schedule?
A: There are 3 dots on the far right side of the transaction. After clicking the 3 dots select “void”. Once voided, the original transaction will no longer be available for creating a new schedule. In such cases, you may need to manually recreate the schedule by entering the amount and essential details from the original transaction.
Q: How can I view all my prepaid expenses?
A: You can find a summary of your individual prepaid expenses on the Prepaids tab under “Summary”. You can toggle to the “Asset Rollforward” page which will show a view of your prepaid expenses by “Type” which can be clicked into for more details.
Q: What if my bill doesn't appear in the list of transactions for prepaid expenses? A: The Prepaid Expenses tab in Puzzle displays only transactions, not bills. To track such expenses, create a manual prepaid schedule.
Q: Does a manually created schedule affect the accuracy of my financial records? A: No, manual schedules reclassify existing expenses and do not generate duplicate journal entries, ensuring accuracy in financial reporting.
Q: Can I export my prepaid schedules?
A: No currently prepaid schedules can only be viewed in Puzzle. Users will be able to export their prepaid schedules soon.