Prepaid Invoices Year-End Information

As we get closer to year-end, please be aware of the following:

A prepaid invoice is an amount paid by the University for a future expense that has been paid in advance.  In other words, prepaid expenses are costs that have been paid in one fiscal year (ex., FY21) but the goods or services will not be received until the following fiscal year (ex., FY22).  The University is required to record prepaids as part of the year-end close process so that these amounts are properly reflected on the University’s annual financial statements. 

Please be aware of the following guidelines as we move into year-end close: for the items listed below, the invoices and the deposit would be treated as a prepaid.  Finance will only review invoices exceeding $10,000 to determine if it is a prepaid expense.  Finance will calculate the amount of the expense that belongs in each fiscal year and prepare a JE to either move the entire invoice or split the invoice between fiscal years by moving expense out of FY21 into FY22.

1. The invoice is paid in FY21 and the goods are received after Wednesday, June 30, 2021
2. The invoice is paid in FY21 and the services occur after Wednesday, June 30, 2021
3. The invoice is paid in FY21 because a deposit greater than $10,000 was due for the goods /services and the goods/services are received after Wednesday, June 30, 2021 
4. The invoice is paid in FY21 for goods received on multiple dates, including FY21 and FY22 dates.
5. The invoice is paid in FY21 for services received on multiple dates, including FY21 and FY22 dates.
6. The invoice is paid in FY21 for Memberships, Maintenance, or Service Agreements that have a period of service that crosses 6/30/21 (i.e., 5/1/21 – 7/31/21)

Note: For goods or services split between fiscal years, the value to be moved to FY22 must be greater than $10,000 for a JE to be submitted.

Please contact Kris Sano at sanok@ohio.edu to discuss any possible prepaid entries needed.

Some examples of prepaid invoices are: 

Example 1: 

Equipment/Goods – paid or partially paid (i.e., deposit paid) in FY21 but Ohio University does not take possession of the equipment/goods until FY22.  The full amount of the invoice paid in FY21 would be a prepaid.   

Example 2: 

Membership, Maintenance, or Service Contracts – paid in FY21 for FY22 periods, e.g., an invoice for membership, maintenance, or service contracts with dates of 7/1/21-6/30/22 that may require early payment and is paid on 6/15/21.  The full amount paid on 6/15/21 would be a prepaid. 

Example 3: 

Memberships, Maintenance, or Service Contracts – paid in FY21 for periods that cross the fiscal year end, e.g., an invoice for membership, maintenance, or service contract with dates of 4/1/21-3/31/22 is paid on 4/1/21.  The calculated amount of the membership or maintenance contract for 7/1/21-3/31/22 would be a prepaid. 

Example 4: 

Travel – Flights, hotel reservations, conference registrations, etc. paid in FY21 for travel not occurring until FY22 would be a prepaid. 

Example 5: 

Services - paid in FY21 for services not occurring until FY22, e.g., an invoice for consulting services dated 7/1/21 – 7/31/21, or DJ services dated 7/4/21, would be a prepaid, 

Example 6: 

Leases – paid in FY21 for lease period of 7/1/21 – 7/31/21 would be a prepaid. 

Please Note: 

• Dates for FY21 are 7/1/20-6/30/21.
• Dates for FY22 are 7/1/21-6/30/22. 

Key Year-End Dates- Please see details in the Business Matters article dated May 07, 2021.

For Questions, please contact Kris Sano at sanok@ohio.edu.