How to use Expense Recognition in Inkle Books?

We built Expense Recognition to give startup founders clarity on income.
Expenses needed the same clarity.

Most founders struggle with:

• Prepaid expenses spread across spreadsheets
• Accrued costs that do not line up with cash payments
• Deferred expenses that make reconciliation hard

Expense Recognition in Inkle Books fixes this by tracking expenses the same way they actually happen over time.

What is Expense Recognition in Inkle Books?

Expense Recognition helps you split and track expenses across months, even when the payment happens upfront or later.

It shows:

• What you have already paid
• What has been recognised as an expense
• What is still pending

This gives you clean books and fewer surprises at month end.

How do I enable Expense Recognition?

Before using Expense Recognition, you need to enable it.

Step 1: Go to Books Settings

• Open Books Settings
• Make sure your accounting method is set to Accrual

Step 2: Enable auto-defer and recognise expense

• Turn on Auto-Defer & Recognize Expense
• Choose the start date
• Click Enable

Once enabled, Inkle Books will automatically create expense schedules for eligible transactions.

If you turn this off later, existing schedules will stay as they are.

What’s new?

Expense Recognition in Inkle Books includes:

• A visual overview of prepaid, accrued, and deferred expenses
• A clickable Expense Waterfall that shows which bills affect each month

What do I see in the overview tab?

The Overview tab shows charts and visuals.

Use this view to:

• Understand total prepaid, accrued, and deferred expenses
• See how expenses move across months
• Get a quick summary without opening reports

This view is best for high-level review.

What is the Expense Waterfall?

The Expense Waterfall shows a detailed month-by-month breakdown. It helps you see:

• When an expense was paid
• How much is recognised in each month
• Which invoices contribute to each period

You can click into a month to view the related invoices.

How to read the Expense Waterfall

• Month shows the period being reviewed
• Prepaid shows amounts paid in advance
• Recognised shows total expense recognised till that month
• Recognised expense by month shows how much expense hits each month

This makes it easy to track how a single payment is spread over time.

When should I use each view?

Use Overview when:

• You want a quick snapshot
• You are reviewing totals
• You prefer charts

Use Expense Waterfall when:

• You want exact numbers
• You need a monthly breakdown
• You want to trace expenses back to invoices

Why Expense Recognition matters

With Expense Recognition, you no longer need manual spreadsheets or adjustments. Your expenses stay aligned with time, not just payments.