> For the complete documentation index, see [llms.txt](https://docs.rillet.com/EjmEP4KZ9BVp9j2ho4Mh/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.rillet.com/EjmEP4KZ9BVp9j2ho4Mh/accounts-payable/prepaid-expenses/create-a-prepaid-expense.md).
# Create a Prepaid Expense
A prepaid expense is a cost paid in advance and recognized over time, such as an annual insurance premium or subscription. In Rillet, you can create one directly from a bill, or from **Deferred Costs** when there is no bill behind it, and the system links it to a prepaid schedule for amortization.
### Create a Prepaid Expense from a Bill
Follow these steps to create a prepaid expense from a bill:
1. Go to **Accounts Payable > Bills**.
2. Click **Add Bill** to open the **Add Bill** page.
3. Fill in the **Details** section:
* **Vendor:** Select the vendor on the bill.
* **Bill #:** Enter the bill number.
* **Dates and terms:** Set the **Bill Date**, **Due Date**, **Payment Terms**, and **GL Impact Date**.
4. Click **Add line item**, then select the expense account where the amortization should be recorded in the **Account** field, for example Depreciation & Amortization.
5. Enter the line's **Amount**, set the period covered by the prepaid expense in the **Service Period** field, and complete any other line item fields as needed, such as **Department**, **Stage**, **Location**, or **Subsidiary**.
6. Click **Save**.
{% hint style="info" %} **Note:**
Always select the appropriate Expense GL account. The Prepaid Expenses option is greyed out because the system handles it automatically, associating the entry with the correct Prepaid Account. To review the amortization schedule, check the GL Impact on the Bill or go to the **Prepaid Schedule**.
{% endhint %}
The system automatically links the Expense GL account to the correct Prepaid Account and updates the Prepaid Schedule.
### Create a Prepaid Expense Without a Bill
Complete these steps to create a prepaid expense that has no bill behind it:
1. Go to **Close Management > Deferred Costs** and select the **Prepaids** tab.
2. Click **Add prepaid** to open the **New prepaid** form.
3. Fill in the **Details** section:
* **Name:** Enter a name for the prepaid.
* **Total amount:** Enter the full amount of the prepaid.
* **Currency:** Review the currency of the prepaid, which defaults to **US Dollar - USD**.
* **Description:** (Optional) Add a description.
4. Select the **Vendor** in the **Source** section.
5. Complete the **Capitalization entry** section:
* **GL impact date:** Review the date, which defaults to the current date.
* **Prepaid account:** Choose the account that holds the balance while the prepaid amortizes.
* **Originating account:** Review the account Rillet fills in after you choose the **Prepaid account**, and change it if needed.
6. Fill in the **Amortization** section:
* **Service start date:** Enter the date the service starts.
* **Service term:** Enter the number of months, use the **12 mo**, **24 mo**, or **36 mo** shortcut, or switch to **End date**.
* **Expense account:** Select the account where the amortization expense is recorded.
* **Amortization method:** Review the method, which is **Straight-line (daily)** by default.
7. Add any required values in the **Custom fields** section, such as the **Department**.
8. Click **Create prepaid** to open the new prepaid.
Rillet opens the prepaid with its **Total**, **Amortized**, and **Remaining** amounts and a month-by-month **Amortization Schedule**.
### **See also**
To learn more about managing prepaid expenses in **Rillet**, review these articles:
* [**Making Prepaid Schedule Adjustments**](/EjmEP4KZ9BVp9j2ho4Mh/accounts-payable/prepaid-expenses/make-prepaid-schedule-adjustments.md)
* [**Expense Transactions**](/EjmEP4KZ9BVp9j2ho4Mh/accounts-payable/expense-transactions.md)
* [**Charges**](/EjmEP4KZ9BVp9j2ho4Mh/accounts-payable/charges.md)
---
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