👉 Basics:
When a payment has a due date that falls in a subsequent financial period, and the payment is made in the current (or prior) period, the payment is most commonly considered a "pre-paid liability" that is only recognized as income (revenue) in the period in which is is due.
👉 Example:
Hill Country Hills HOA sends invoices for the 2027 Annual Dues (Assessments) of $500. The invoice is sent on December 10th, 2026 with a due date of January 15th, 2027. Of the 200 homes in the HOA, 50 homes make full payments in the year 2026. Instead of accounting for these payments as 2026 income and reporting $25,000 over budget for Dues in 2026 and $25,000 under budget in 2027, the payments are booked in the ledger as prepaid assessments in 2026 (a liability account in the Chart of Accounts). When the payment due date is met, these "pre-paids" are reclassified as revenue in 2027, relieving the liability and recognizing the revenue appropriately in 2027.
Prepaid assessments are dues you collect before the charge’s recognition date. Cash hits the bank now. Income waits until that date. Vlge credits Prepaid Assessments (usually account 2100) instead of Accounts Receivable, then flips the liability to A/R on the recognition date so it nets against the accrual to Revenue.
The homeowner already sees the charge as paid. The general ledger and balance sheet stay on accrual. Monthly, quarterly, and annual dues all use the same date rule.
Changing the fiscal year start does not need a separate prepaid step.
Where to find it
Financial Dashboard → Settings → Prepaid assessments. (You need permission to manage Financial Settings.)
⭐️ How Vlge decides a payment is "pre-paid"
A payment (or leftover unapplied credit) is prepaid when its date is before the charge’s recognition date. Recognition is the date on the charge’s accrual journal, which is usually the due date.
➡ Examples:
November payment toward a December 1 monthly due: prepaid.
March payment toward an April 1 quarterly due: prepaid.
December payment toward a January 1 annual due: prepaid.
Payment on the due date itself: not prepaid. It relieves A/R and income is already in that period.
When creating a charge, set the due date to the day income should land, not the day you send the bill. If you bill 2027 annual dues in November 2026 and set the due date to November 2026, Vlge will treat that as current income. Ledger dates for charges follow the due date for timing.
👉 Before you turn it on
Confirm 2100 Prepaid Assessments is on the Chart of Accounts (the default HOA chart includes it). If it already exists, the settings card uses that account, including any opening prepaid credit already on the line.
Decide whether you are only going forward, or also moving existing Vlge payments off A/R onto 2100.
If books are closed, any later reclass must use a cutover date after the closed-through date.
See Financials: Chart of Accounts if you need to add or review 2100.
⚡️ Path 1: Onboarding with existing prepaids
Use this when the prior system already shows prepaid assessments (owners who paid next period’s dues before you cut over to Vlge).
👉 Step 1: Put the opening prepaid balance on 2100
In Opening Balances, enter the prior system’s prepaid assessments liability on 2100 Prepaid Assessments as of your cutover date. That opening credit stays on 2100. Enabling prepaid accounting does not post another opening balance and does not change that journal.
For the rest of the opening entry, follow
👉 Step 2: Import or create the future charges with the right due dates
If you import unit ledger history or create next-period dues in Vlge, give those charges the due date the income belongs to (for example January 1 of next year). See Importing Unit Ledger History and Create Charges: Dues, Fines, and Fees.
👉 Step 3: Enable prepaid assessments
On the Prepaid assessments card, confirm the liability account (2100 if it already exists) and click Enable. New collections that arrive before a charge’s recognition date credit 2100 instead of A/R. Enable does not move historical payments. The opening 2100 balance from Step 1 is already correct.
👉 Step 4: Reclassify existing Vlge payments only if you need to
If you already posted payments in Vlge that were applied to not-yet-recognized charges (or left as unapplied credit), those may still sit on A/R. The card shows how many payments and how many dollars that is, even before Enable.
After Enable, click Reclassify existing. Review the list by address, payment date, due date, and amount. Confirm. Vlge posts one adjusting entry per payment on the cutover date you pick.
Opening-balance prepaid on 2100 will not appear in that list. Only posted Vlge payments that still need to move off A/R appear there.
⚡️ Path 2: Year-end (or end of period) billing for the next period
Use this when you want to send next year’s (or next quarter’s) dues now, and you want payments that are collected this year to stay out of this year’s assessment income.
👉 Step 1: Create the future charges first
Create the dues with a due date in the period they belong to. Example: send January 2027 dues in November 2026, due date January 1, 2027. The same idea applies to a quarterly or annual charge. How you set up charge types is in
👉 Step 2: Enable prepaid assessments before you collect
Turn it on in Financial Settings → Prepaid assessments. From that point, any payment dated before the charge’s recognition date credits 2100. Unapplied credit also sits on prepaid, not A/R.
👉 Step 3: Collect as usual
Online, lockbox, ACH, and recorded offline payments all follow the same rule. The owner’s ledger can show the charge as paid in advance. This year’s income statement does not pick that payment up as assessment income.
👉 Step 4: Let the due date do the rest
On the recognition date Vlge posts the normal accrual (Dr A/R, Cr Revenue) and a recognition entry (Dr Prepaid Assessments, Cr A/R). Net effect that day: Dr Prepaid Assessments, Cr Revenue. Income lands in the new year or period. A/R nets to zero for that paid charge.
👉 Step 5: If you already collected before Enable
Enable first, then use Reclassify existing and review the payment list before you post the adjusting entries. Pick a cutover date in an open period (after books closed through).
Enable vs "Reclassify existing"
Enable turns the feature "on" for new payments only. Existing posted payments stay where they are.
"Reclassify existing" is optional. It moves qualifying posted payments from A/R onto 2100 as of a cutover date. You will see each address, payment date, due date, and amount before anything posts.
You can Enable now and reclassify later. You cannot reclassify until Enable has run.
⭐️ Monthly, quarterly, annual, and fiscal year
Vlge does not treat those as different prepaid products. It only compares payment date to recognition date (due date). A quarterly paid in the first month of the quarter and an annual paid in the prior year use the same path as a monthly paid early.
Shifting the fiscal year start (for example calendar year to July) changes how reports bucket months. It does not change whether a payment is prepaid, and you do not need a second prepaid setup for the new fiscal year.
⚠️ What not to do
Do not put next-year dues on a this-year due date if you want this-year payments kept out of this-year income.
Do not expect Enable to recreate or increase an opening 2100 credit you already posted.
Do not reclassify on a date that is already closed. Choose the next open day.
Do not add a second Prepaid Assessments account if 2100 already exists. Use the existing line.
Important Note: The reclassify does not go "re-tell" the story for payments that were technically prepaid at one point but later applied to a charge in a different period. For example, if you enable and reclassify in September, and there was a $500 payment made in July that was technically prepaid for all of July, and it was later applied to an August charge (technically making it August revenue) - This feature does not go back and adjust the ledger to show prepaid for July and revenue in August
This process applies to any category (not just dues) - so any payment received for a future period due date is considered prepaid when enabled.
Starting Balances: If you establish a cutover date of Jan 1, 2026 for example, and you set your Prepaid Assessments account (usually 2100) to $20,000, that amount is not tied to unit-specific prepaid balances so it cannot be "relieved" in favor of revenue/income when a credit is "earned" by the association in future periods. As such, its important to build your 2100 Prepaid Assessments account with unit-backed amounts.
Summary:
From an accounting standpoint, prepaid assessments are unearned assessment revenue: cash received before the association has "earned" the related dues. Until the charge’s recognition date (normally the due date), the credit belongs on a current liability (Prepaid Assessments, usually 2100), not on A/R and not on assessment income. That keeps the year-end balance sheet honest (you owe that period of coverage back to the owners, or you will apply it when the dues accrue) and keeps the income statement on the matching principle (assessments hit Revenue in the period they are for).
On the recognition date, the books accrue Dr A/R / Cr Revenue as usual, and a second entry Dr Prepaid Assessments / Cr A/R clears the liability against that receivable so A/R nets to zero for an already-paid charge, and the only remaining P&L effect is income in the new period. The general ledger stays full accrual either way; cash or modified-accrual reporting only changes how the P&L is presented, not these journals.