To explain how to link Profit & Loss accounts to Balance Sheet accounts in Magnifi so projections balance correctly and cashflow movements are recorded in the right place.
When setting up your Chart of Accounts for the first time.
When projecting Profit & Loss items that impact the Balance Sheet (e.g., creditors, prepayments, loans).
When you want to ensure every active Profit & Loss account flows through to the correct Balance Sheet account.
Under Chart of Accounts, Profit & Loss tab, there is a column called BS Account.
This is where you link each Profit & Loss account to a Balance Sheet account to ensure the Balance Sheet reconciles.
Tip – You don’t need to link every P&L account.
If you leave a Profit & Loss account unlinked, Magnifi automatically treats it as a cash-paid expense and links it to your bank account for cashflow purposes. This is normal for most regular expenses such as printing & stationery, advertising, subscriptions, etc.
The BS Account cell will remain blank, but the account will still appear in the Profit & Loss and flow through to Cashflow correctly as a direct cash payment.
Use Auto Map to quickly map your bank account, receivables, and payables. Magnifi will then auto-map many accounts using built-in logic. Auto Map appears as a button at the top of the BS Account column.
Here are some common linking scenarios:
Sales → Accounts Receivable
Sales recorded against Accounts Receivable.
Receipts projected based on the customer Terms.
Purchases → Accounts Payable
Purchases recorded against Payables.
Payments projected based on the supplier Terms.
Bank Charges → Trading Account
Direct debit from bank (not via Accounts Payable).
Depreciation → Accumulated Depreciation
P&L category = Depreciation.
If you use Depreciation or Interest categories, Magnifi will report EBITDA.
If you prefer not to report EBITDA, map to Other Expense instead.
Interest – Loan → Loans Secured
Unless it's an interest-only loan which would be mapped to the Trading Account.
Loan repayments are entered as a Projection under the relevant Balance Sheet liability account.
Annual Leave Provision → Provision for Leave
Reflects monthly journal posted to recognise the movement in the provision.
Superannuation → Superannuation Payable
Expense recorded against Super Payable.
Cash payment projected based on Payment Terms.
Wages → Trading Account
Although wages may post to Wages Payable, allocate directly to Trading Account for simplicity.
If they were allocated to Wages Payable, the wages would be deducted based on the payment terms.
Insurance (Prepayment) → Prepayments
In Profit & Loss, enter the monthly expense amount manually. Use the double-click shortcut to copy it across future months.
In the Balance Sheet, go to the Prepayments account and add a Projection for the full payment in the month(s) the cash actually leaves.
This ensures:
Expense appears evenly across months in the P&L.
Cash outflow is shown correctly in the month of payment.
Balance Sheet clears the prepayment balance as it unwinds.
Income Tax Expense → Income Tax Payable
Expense linked to liability account.
Actual payments added as a Projection under the Balance Sheet account.
Use Auto-map to link the majority of Profit & Loss accounts to key Balance Sheet accounts.
If accounts are not linked, Magnifi automatically assigns them to the bank account for cashflow. This is standard behaviour for most operating expenses, but you should link accounts to Receivables, Payables, Prepayments, Loans, etc. where timing or balance tracking is important.
Use Prepayments for costs to be spread evenly in the Profit and Loss rather than expensed upfront.
Interest on Loans should link to the relevant liability account, not directly to bank (unless it's an interest-only loan).
When in doubt, it’s safest to link to the bank account.
Q: My new expense isn’t linked. Will it still work?
Yes. If you leave an expense unlinked, Magnifi automatically assigns it to the bank account for cashflow purposes. This is the standard behaviour for most operating expenses.
Q: Will it still appear in the Profit & Loss projection?
Yes. Unlinked expenses appear normally in the Profit & Loss and flow straight through to Cashflow as direct cash payments.