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) 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.
If a Profit & Loss account is not linked, it will default to the bank account, however the cell will remain blank.
Use Auto Map to quickly map your bank account, receivables, and payables. Magnifi will then auto-map many accounts using built-in logic.
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
Cost spread evenly across the year in the Profit and Loss.
Cash payment projected as a Projection in the Balance Sheet under the relevant account (eg Prepayments).
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, projections will still reconcile but may distort cashflow (everything defaults to bank).
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.