How to handle expense date

1

I am sure this topic has been discussed, or is documented somewhere. However, I do not know which search terms to use.

My financial year is the same as the calendar and I have an invoice for a provider that is due every year on the first of January. However, payments are automatically done 15 days before the due date, which seems to record the expense on the previous year instead of the year on which the service is used.

How can I change this so even if the payment is done in 2024, the expense will be shown for 2025?

Thank you

2

Are you using cash or accrual accounting?

Post the expense as an invoice dated 01 Jan 2025 and post the payment to the supplier’s account

At the year end, it will show as a debit on the supplier’s account and not as an expense

Alternatively, you could set it up as a pre-payment to a prepayment balance sheet accout

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3

I’m not very familiar with the difference, but from what I can read online I am using cash accounting. (I am a web dev working alone)

Should I link the payment to the invoice, or leave the invoice field empty?

4

The issue is what method you are indicating is being used on your tax return to your tax authority.

Ask your accountant, they will know

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5

I would highly suggest that you look at Accounting Coach, they have information there that will help you decide which to use.