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Entering bills paid in monthly installments

Lisapapa1173

When we renew our insurances we pay this off in installments over the year.

Should this be recorded as a Spend Money transaction each time the installment is paid or enter the full amount as a purchase and then pay bill when each installment is paid?

Thanks

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Albare

From what I know if entered as a recurring transaction you setup the number of times the transaction recurrs, e.g. monthly or for an actual number of times e.g. 12 times, and set up a reminder etc...

However until you actually record a recurring transaction it doesn't "sit" within MYOB as an open bill. This might effect you with respect of claiming GST if you are on the accural tax method vs cash.

I've set up some bills this way, that is one overall bill and made several instalment payments against it like Council rates, just have to remember when to pay them, but I use Outlook to remind me through Calendar reminders.

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Lisapapa1173

Hi Mike
Thank you for the quick response

Re, 'You may then wish to transfer 11/12 of that to a prepayment (asset) account, and set up a recurring general journal to transfer 1/11th of that back to insurance expense over the next 11 months.' ?
How to do that, Is any photo shot possible?
Thanks
Lisa

Lisapapa1173

Am just wondering if any difference between Instal Payment and Recurring Payment when doing data enter

Albare

I'm not an accountant however this is exactly what I do. We premium fund all our policies as one monthly payment.

I enter the full amount as a service purchase, itemising the individual policies (there are 7) plus a line for the interest charge and save it as a recurring purchase.

I set it up as 12 transactions and then when using bank feeds allocate the payment to the open invoice.

I also have seperate accounts created for "Insurance Premium-Motor vehicle, Product liability, Property, etc....", "Broker's fee," "Stamp duty" and "Insurance Premium interest charge" and "Application fees".

It take's a bit of work initially however for the last 10 years the same Recurring Transaction has been edited as the renewal rolls over each Feb.

Lisapapa1173

Mike_James

Hi @Lisapapa1173 , I suggest that a service purchase is recorded, using the invoice details, which may include interest charges. The purchase will remain in payables, and can be paid from there. The insurance charges are allocated to an expense account. You may then wish to transfer 11/12 of that to a prepayment (asset) account, and set up a recurring general journal to transfer 1/11th of that back to insurance expense over the next 11 months.