In this article, we will walk you through how to use Non-Cash Expenses and Payment terms to further customize your financial model.
What is a Non-Cash Expense?
A non-cash charge is a write-down or accounting expense that does not involve a cash payment.
Examples of Non-Cash Expenses:
How to Record Non-Cash Expenses in Finmark:
Step 1: Add or Edit to the Non-Cash Expense
Step 2: Set the Payment Terms as Non-Cash
This will forecast the expense but will not impact cash.
Under settings, you can include timing-of-payment details for your expenses to better forecast true expense amounts and cash flow, as well as, have more accurate actuals to review and make decisions based on.
Example of when to use Expense Payment Terms:
Paying an office lease upfront for 6 months (i.e. cash goes out the door on Jan 1, but we only recognize office rent expense after each month closes)
Step 1: Under the Settings Section scroll down to Payment and Collection Terms.
Please Note - The default setting is labeled as “Immediately” 1 Month set to 100%, This will apply to all current expenses. This payment term is uneditable.
Step 2: Under Accounts Payable Click +Add another payment term
Step 3: Add New Payment Terms
Enter the name of the payment term
Add # of Months for Payment Term (Max 18 Months) by clicking the + Icon.
Enter the percent of payments each month as a percentage (must add up to 100%)
Payment Terms with Trailing Zeros:
If a payment term is created with a payment term set to zero for the last month, Finmark will automatically ignore the last month.
Month of = %50
+1 Month = %50
+2 Months = %0
Please Note - Any amount that equals 0 in the middle will be counted. For example, if the payment term is (%50, %0, %50) Finmark will not drop the zero month in the middle. We only drop zero months after the last non-zero month.