How are you recording the pre-payments?  If you are crediting cash and debiting accounts payable, that would be the problem.  You need a separate account for prepaid expenses.

Our pre-payments are recorded (through the A/P module) as a debit to prepaid expenses (liability account) and a credit to accounts payable.  Once they are paid, accounts payable is debited and cash credited.  Keep in mind, the transaction/posting date is later than the check date, which is where the problem comes in for reconciling A/P.

I see.  Why would you post the transaction to a future period?  I don't have this problem because I record in the current period, and pay in the current period.   This is what balance sheets are for, so I am a bit lost as to why you would do it this way.

I too get frustrated reconciling A/P to G/L for the prepaids.

Our prepaids are mostly posted as recurring invoices... such as rents.

Rents are due the 1st of the month.  The "Timing Principle" in accounting says that the December rent should be posted to December activity.  In order for the rent check to arrive at our landlord by the first of the month, we cut a check in November (after updating/posting our December recurring expenses).  Hence, the December bill is being paid in November.  But, as MTart states :  When printing an A/P trial balance as of November 30th, the December rent does not show as a negative amount for that vendor.  Most other accounting software I've used does.

This post doesn't answer the question, it just clarifies the problem.

I see.   I looked prepayments up in the help screen, and it was too goofy to follow, but I do have a suggestion.  I just tested it and it worked, even though the steps are annoying.  I entered an invoice in November for Zero Dollars.  Then I adjusted it in December by 500.00 to my rent account.  Then I paid it in November.  This made the payment show up as a negative on my November Trial Balance, and go away on my December Trial Balance.

Its extra steps, but I hope it helps.

Thanks blorf, I will certainly try this out!