Go to the Journals tab to access this feature.

ScaleXP will use text recognition to automate expense recognition, enabling you to prepay bills, add suggested accruals, and automatically release accruals when bills arrive, all in a few clicks.

Note that in consolidated companies, expense recognition must be done at the subsidiary level, in line with the accounting connection.

Getting started

Go into any expense journal page. Use the three dots at the top right of the page to set up or change your settings for expense recognition.

Read more in how to set and change expense journal settings.

Step 1: Review cost allocations for prepayment

Select prepayments

ScaleXP will automatically spread costs as they should be recognized, using text recognition, and generate associated accrual and prepayment journals.

Use this page to:

1. ensure that all bills have been allocated to the correct start and end dates for cost recognition;
2. ensure that all bank transactions have been allocated to the correct start and end dates for cost recognition;
3. include or exclude line items from prepayment journals.

Note: this page is for prepayments only and thus excludes all cost accruals.

Filters at the top control:

• As Spent vs IFRS/GAAP view;
• the expense date range;
• accounts;
• included data (issued bills, bank transactions, manual bills).

Note: "As Spent" allocates by start and end dates, while "IFRS/GAAP" recognizes all back-dated cost in the month of bill issue. Use "Add Accruals" (see below) to recognize the back-dated expenses via an accrual journal and to see all costs including accruals.

Note: bills coded to any prepayment account will automatically be included in journals. Go to the Review Prepayments page to allocate to the appropriate expenses account. See how to automate prepaid expenses: setting up prepaid expenses in ScaleXP.

Review start and end dates

• Review costs at supplier level.
• To see supplier detail by invoice, click the down arrow by the supplier name.
• To see invoice detail by line item, click on the viewing box.

Edit start and end dates

This is done at invoice line level.

Use the calendar to see invoice and date range detail and select the appropriate date range. Choose the appropriate service start and end dates to be used for recognizing the expense.

Hint: you can use the threshold (in Settings) to prevent the system from showing very small amounts for review.

Add to journals

Use the color coding to help you decide which items to review.

• Orange items are to review: ScaleXP has identified that these items might be prepayments or accruals.
• Blue items are marked as included in journals. The system will automatically spread cost for these items over the relevant months in accrual and prepayment journals.
• White items are being expensed directly in the month the bill is received.

Use the + button to code an item as included in journals. This can be selected for either a supplier (all invoices for that supplier) or at individual invoice level.

Use the – button to mark an item as reviewed and not included in journal adjustments. Do this at either supplier or invoice level — whichever you prefer.

If you change start and end dates in a bill and the start and end date are not 100% in the month of the bill issue date, then you must select "Add to journals" for the dates to be saved and the cost allocation to be included in your journals.

Review bills by month received

To ensure that ScaleXP has picked up all bills as expected, you can also use the Bills Received page to view by month.

• This page can be filtered by account and bill date.
• Read more in how to review bills by issue month.

Step 2: Post prepayment journal

• For bills which include advance payment elements, ScaleXP will automatically allocate cost to a prepayment asset of your choice.
• If bills are coded to an expense account, you can go right to the prepayments journal to post the appropriate cost journals. Each month, ScaleXP will automatically create journals for you to post which allocate prepaid elements of bills to the balance sheet and recognize them in later months.
• If bills are coded directly to a prepayment balance sheet account, use Review Prepayments to allocate line items to the correct expense accounts, then post the journals.
• Read more in how to automate your prepaid expense journal: prepayments journal report.

Step 3: Add cost accruals

Go to the "Add accruals" page

Filters at the top control:

• As Spent vs IFRS/GAAP view;
• the expense date range;
• accounts;
• included data (issued bills, bank transactions, draft bills (Xero only), manual accruals).

Add accruals

• We use pattern recognition to identify missing supplier bills and suggest accruals.
• You can also add your own.
• See how in how to add cost accruals.
• Accruals will release automatically when an associated bill is received or a pre-set date is reached.

Step 4: Post accrued cost journal

• Go to the Cost Accruals section to review accruals and release any not required.
• Here you will see accruals you have entered manually as well as any back-dated costs from bills you have selected to include in your cost recognition journals.
• Once bills are received, ScaleXP will automatically match them with associated cost accruals and auto-release the accrued amount.
• You can also choose to manually release accruals which are no longer required.
• Once you have reviewed your accrual additions and releases, use the journal page to document and post your accrued cost.
• See more detail in how to automate accrued cost journals.