Prepaid Invoices Year-End Information

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

A prepaid 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., FY23) but the goods or services will not be received until the following fiscal year (ex., FY24). The University is required to record prepaids as part of the year-end close process so 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 FY23 into FY24.

1. The invoice is paid in FY23 and the goods are received after Friday, June 30, 2023
2. The invoice is paid in FY23 and the services occur after Friday, June 30, 2023
3. The invoice is paid in FY23 because a deposit greater than $10,000 was due for the goods /services and the goods/services are received after Friday, June 30, 2023
4. The invoice is paid in FY23 for goods received on multiple dates, including FY23 and FY24 dates.
5. The invoice is paid in FY23 for services received on multiple dates, including FY23 and FY24 dates.
6. The invoice is paid in FY23 for Memberships, Maintenance, or Service Agreements that have a period of service that crosses 6/30/23 (i.e., 5/1/23 – 7/31/23)

Some examples of prepaid invoices are:

Example 1:  Equipment/Goods – paid or partially paid (i.e., deposit paid) in FY23 but Ohio University does not take possession of the equipment/goods until FY24. The full amount of the invoice paid in FY23 would be a prepaid. 

Example 2: Membership, Maintenance, or Service Contracts – paid in FY23 for FY24 periods, e.g., an invoice for membership, maintenance, or service contracts with dates of 7/1/23-6/30/24 that may require early payment and is paid on 6/15/23. The full amount paid on 6/15/23 would be a prepaid.

Example 3: Memberships, Maintenance, or Service Contracts – paid in FY23 for periods that cross the fiscal year end, e.g., an invoice for membership, maintenance, or service contract with dates of 4/1/23-3/31/24 is paid on 4/1/23. The calculated amount of the membership or maintenance contract for 7/1/23-3/31/24 would be a prepaid.

Example 4: Travel – Flights, hotel reservations, conference registrations, etc. paid in FY23 for travel not occurring until FY24 would be a prepaid.

Example 5: Services - paid in FY23 for services not occurring until FY24, e.g., an invoice for consulting services dated 7/1/23 – 7/31/23, or DJ services dated 7/4/23, would be a prepaid,

Example 6: Leases – paid in FY23 for lease period of 7/1/23 – 7/31/23 would be a prepaid.

Please Note:

Dates for FY23 are 7/1/22-6/30/23.

Dates for FY24 are 7/1/23-6/30/24.

Key Year-End Dates - Please see the Finance Operating calendar.

Note: For prepaids, the calculated value to be moved to FY24 must be greater than $10,000 for a JE to be submitted.