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How would I keep a record of payments with an insurance supplier (Zego if that helps) if they bill on the basis that the account gets topped up with credit, then they deduct from the credit on a pay as you go basis?

I.e: Top up so you have £100 credit, they then deduct £x here and there when the vehicle is used, then when the credit falls below £5 you would top up again.

To further clarify this is for working with Deliveroo/UberEats in the UK among others, on a sole proprietor basis

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  • Is this a personal finance question or an accounting question? – JohnFx Dec 11 '20 at 18:31
  • Hi; welcome to the site. Business accounting is not on topic here, unfortunately (only personal accounting). Given your tags, it looks like this is asking about business accounting, so I'm voting to close the question. You may want to find a site that specializes in business accounting (or, better yet, hire an accountant). – Joe Dec 11 '20 at 18:37
  • In the US, at least, it's considered an asset in the Prepaid Expenses class which is countered by a reduction in Cash. Each time a chunk of that prepaid expense is used, it is countered by an Expense entry. – RonJohn Dec 11 '20 at 18:58
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    @Joe sole proprietorship bookkeeping is explicitly on-topic. money.stackexchange.com/help/on-topic – RonJohn Dec 11 '20 at 19:33
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    @Joe and there's no evidence that it's *not an SP. All we know in the small-business tag. – RonJohn Dec 11 '20 at 20:53
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One simple way would be to keep a loan account (in your accounting package) in the name of the supplier. Put the account in an Asset or Liability register (check with your accountant which they prefer) so that it isn’t treated as an expense account.

When you send money to the supplier, you record it as going from your bank account to the loan account.

When you incur a usage fee, you record it as a payment coming out of the loan account.

By creating the account in an Asset or Liability register, you are effectively treating the account like a bank account. The accounting package should therefore consider the balance of your loan account as part of your net worth. Funds are treated as expenses only when you record your usage fees.

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