Prepaid Schedule

Prepaid Schedule

Extracts prepaid items from invoices and builds amortization schedules. Initial extract is best in Cowork (PDF/image invoices in a folder). Ongoing schedule maintenance is best in the Excel add-in (existing workbook).

Required inputs

For new items:

• Invoice files (PDF, PNG, or structured CSV/XLSX with invoice fields)
• Period of recognition — the close period the items are being booked into (e.g., 2026-04)

For schedule maintenance:

• Existing prepaid workbook with the standard tabs (Schedule, Inputs, Summary)

Workflow — new item extraction

1. Extract invoice fields. Run scripts/extract_invoice_fields.py. For each invoice, extract:

   • vendor name, invoice number, invoice date
   • amount (USD)
   • service start, service end (or service period descriptor)
   • category (subscription, insurance, rent, license, etc.)
   • confidence per field (HIGH / MEDIUM / LOW)

   Fields the OCR cannot extract with confidence are blank and flagged for preparer. Don't guess service periods. If the invoice says "annual subscription" with no dates, mark service_period_descriptor = "annual" with MEDIUM confidence and let downstream logic infer 12 months (still MEDIUM).

2. Classify treatment. For each item:

   • EXPENSE_NOW — service period closes in current period or earlier, OR amount < materiality.prepaid_capitalize_threshold (default $1,000)
   • PREPAID — service period extends > materiality.prepaid_min_months past period close
   • REVIEW — service period ambiguous, vendor unfamiliar, or amount unusually large

3. Build the amortization schedule. Run scripts/build_amortization.py. The output is formulas, not values — schedule cells reference the inputs tab so changes propagate. For each PREPAID item:

   • Capitalize full amount on service start month to account 1220 - Prepaid Software/Subscriptions (or the right prepaid account per category)
   • Amortize =amount / months each month into the matching expense account
   • Round the final month to absorb cumulative rounding so the schedule fully amortizes

4. Generate JEs.

   • Initial recognition (one JE per item): debit 1220, credit 2010 AP (or 1010 Cash if cash basis), full amount.
   • First-month amortization (consolidated across items by expense account): debit expense, credit 1220, monthly amount.
   • Both JE sets go to JEs_Proposed for je-review.

5. Build summary views.

   • By month — total prepaid balance roll forward, amortization, ending balance
   • By vendor — total open prepaid by vendor
   • By category — total amortization by expense account for the current period

Workflow — schedule maintenance

For an existing workbook:

1. Add new items to Inputs tab.
2. Recalculate the Schedule tab — formulas pick up new rows automatically if the schedule uses dynamic ranges or table references. If hardcoded ranges, extend them.
3. Verify roll-forward: prior period ending balance + additions − amortization = current period ending balance.
4. Generate the current month's amortization JE.

Output workbook tabs

• Cover — period, preparer, status
• Inputs — one row per prepaid item with all extracted fields (this is the data tab; everything else references it)
• Schedule — month-by-month amortization, formulas referencing Inputs
• Summary_By_Month — totals roll-forward
• Summary_By_Vendor
• JEs_Proposed — recognition and amortization JEs
• Evidence — every Inputs row links back to its source invoice file and page
• Review_Notes — items flagged REVIEW, MEDIUM/LOW confidence extractions, vendor not previously seen

Invariants

• Schedule cells contain formulas, never computed values pasted as numbers. A reviewer changing an amount or term must see all downstream values update.
• Service period must be derivable from source. If only an invoice date is present with no service period or descriptor, the item is REVIEW.
• Every Inputs row has an Evidence row pointing to the source invoice file and page.
• The amortization fully resolves to zero by the service end month — rounding handled in the final month.

When to say "I don't know"

• Invoice has no clear service period and no period descriptor → REVIEW, ask the preparer.
• Vendor name is unreadable (OCR low confidence) → REVIEW, ask the preparer to confirm.
• Amount is materially different from prior invoices from the same vendor → flag for confirmation before adding to schedule.