Profit Players,
Thanks to the overwhelming response from last week’s Chart of Accounts video, I’ve decided to extend the Back to Basics series indefinitely! How many videos will there be? Four? Twenty-four? I don’t know yet—but I do know they’ll be packed with value.
Today, we’re diving into prepaids.

What the heck are prepaids?
They’re cash outlays you make today for expenses that don’t fully apply to the current accounting period. Instead, these payments are allocated over time to reflect their true cost.
Let’s break it down with some examples:
- That hefty annual premium you pay upfront? It needs to be spread out over 12 months, with 1/12 allocated to each month. This keeps your profit and loss statement accurate while the remaining balance sits on your balance sheet.
- Same idea—allocate the cost over the applicable period.
- Sometimes, vendors ask for payment upfront for goods they’re holding (like hops or cans). Since you don’t physically have the materials yet, they can’t go into inventory. Instead, these payments are tracked as prepaids until you receive the materials.
Prepaids are crucial for accurate financials and better decision-making. To make this process easier, I’ve included an SBS Prepaid Tracker in this email. This simple yet powerful tool allows you to:
- Log prepaid amounts
- Track applicable dates
- Monitor your allocations throughout the year
Download the tracker and start using it today if you handle your own accounting. If you have questions or need a walkthrough, shoot me an email—I’ll happily create a video to guide you.
Talk to you next week, Profit Players.
-cf