[GNC] How To Handle Prepayments

[Stan Brown]

> From: Adrien Monteleone <adrien.monteleone at lusfiber.net>
> I receive a bill about a month in advance of the due date every six
months for auto insurance. If I pay that bill early, or on time, I am
gaining a ?pre-paid? asset to be used up over the next six months. My
problem wasn?t using the bills feature to handle this, or the expensing
(I just set up a scheduled transaction for that part) but that I
couldn?t post the ?advance? bill without it posting to my assets right
away. Yet, it isn?t an asset till I actually pay it. I was wanting to
take advantage of the bills due reminder for this bill. I had to settle
on waiting to post the bill until I actually make the payment and
forgoing the reminder. That way, my assets weren?t inflated early.
Otherwise, everything else works out fine.

Why not use your bank's bill-pay service to schedule the bill payment?
At least in the US, such services are typically free, and in fact you
make money because you don't have to use a stamp, not an envelope, or a
paper check, all of which cost money to replace.

When I get the bill -- and in my case it's almost two months in advance
for six-month auto insurance -- I immediately schedule bill pay for the
due date and then record:

Debit:  Assets » Prepaid Expenses » Auto Insurance
Credit: Bank Accounts » Bank X
Description: (Company) payment on (due date)

Thus I don't have to remember to pay the bill, my total assets are not
inflated, and I know that money is earmarked so I don't accidentally
spend Bank X down to a balance that is still positive but not large
enough to cover the scheduled payment.

-- 
Regards,
Stan Brown
Tompkins County, New York, USA
http://BrownMath.com
http://OakRoadSystems.com