How to reverse out Opening Accounts Payable Balances

What is an Accounts Payable Accrual?

If you create accounts on an accruals basis, then at the end of the previous financial year, you will need to accrue for expenditure that relates to that financial year but was not paid out until the following financial year.

At year-end, these will be shown as part of the 'creditors' on your balance sheet. Typical examples include HMRC and pension payments relating to the last month of your financial year that were not paid until the next month, and Independent Examination Fees. 

How to enter Opening Accounts Payable Balances

When setting up ExpensePlus, you will need to set up your opening fund balances. As part of one of these steps, you will be asked to allocate your opening accounts payable balance to the different funds this relates to. 

Don't worry if you don't have these figures just yet - you can set up your opening balances later. In the meantime, you can still record transactions that have/will be accrued at year-end and that are showing on your current financial year bank statements that you have uploaded - keep reading to find out how to do this.

How to enter a bank transaction as being an Opening Accounts Payable Balance Reversal

To find out how to upload and reconcile bank transactions, be sure to watch the Bank Reconciliation Module Overview video.

As part of this process, on the match transactions screen, you can record outgoing transactions as expenditure, transfers, refunds, or one of the other transaction types.

When a transaction is an opening accounts payable balance reversal, select this option from the dropdown list (see below). You will then be able to enter the fund it relates to; splitting the amount if needed against multiple funds.

Note: the fund(s) you select should reflect the fund(s) you recorded the accrual against in your prior financial year accounts.

How to make an adjustment where the amount paid out is different from the amount accrued?

If you are yet to close your prior year accounts and you realise that you've incorrectly accrued for expenditure, then you may be able to simply correct this in your prior year's accounts.

If your prior year accounts are already closed, then:

If you didn't accrue for expenditure that should have been accrued for

You should simply record this as an expenditure when bank matching transactions.

If you wrongly accrued for expenditure OR the payment owed no longer needed to be paid

Then you will need to account for this within the adjustments screen.

If you accrued for expenditure, but the amount paid was different from the amount accrued

You should record the payment as an opening balance reversal when bank matching transactions.

AND THEN account for the difference, within the adjustments screen

• If the amount paid was less than the amount accrued, you should enter a positive reversal amount for the difference

• If the amount paid was more than the amount accrued, you should enter a negative reversal amount for the difference

To better understand the Bank Reconciliation module, please view the module overview video here.