About prepayment processing

The standard method of creating prepayments involves the following stages:

1. In the Purchase invoices (AP301000) window, create a supplier prepayment request by selecting the Prepayment document type.
   If the prepayment is for stock items, include this information in the description.
   Upon saving the prepayment, the system assigns a reference number based on the number series for invoices in the Supplier ledger preferences (AP101000) window.

   A prepayment can have one summary line or multiple detail lines.
   VAT cannot be applied or withheld on prepayments, but VAT amounts can be added to the prepayment amount for simpler calculations.

2. You can release the prepayment requests one by one by using the Purchase invoices (AP301000) window, or along with other supplier ledger documents by using the Release supplier documents (AP501000) window.

   A prepayment request, when released, does not generate any transactions.

3. If approval is required in your system, the prepayment request must be approved in the Approve invoices (Approval) (AP50200S) window before it can be actually paid.
4. Pay the prepayment by creating an supplier ledger payment in the Sales invoices (AR301000) window.
   Cash discounts do not apply to prepayments.
5. Release the supplier ledger payment.
   The system changes its status to Closed and changes the status of the original prepayment to Open, so that you can apply this prepayment to invoices and credit adjustments.

Alternatively, you can create a prepayment more simply, by using the Customer payments (AR302000) window.

Even if approval of documents is required in your system, prepayments created in this way are not subject to approval.

Also, you cannot pay prepayments created in this way by a payment method that requires printing of payments.

If you do not designate a distinct account for prepayments, supplier prepayments will be debited to the supplier's ledger account.

When determining the number and type of prepayment accounts to use for easier tracking in the system, you can choose one or any combination of the following options:

• Use a single prepayment account for all prepayments (to all suppliers)
• Specify prepayment accounts for specific supplier classes
• Designate separate prepayment accounts for individual suppliers

Assign the prepayment accounts as follows:

1. In the Supplier classes (AP201000) window, specify the prepayment account and subaccount for the default supplier class and for each of the other supplier classes.
   This will make it easy to create new supplier classes and new suppliers with the proper prepayment account specified.
2. Use the Suppliers (AP303000) window to specify the prepayment account and subaccount for each supplier.

You can apply the Open prepayment to invoices and adjustments. If a prepayment still has a balance after being applied to invoices and credit adjustments, it can be released with that balance.

If a prepayment was incorrectly applied to invoices and adjustments and released, you can reverse the application if needed.
To do this, click the Reverse application action on the Application history tab of the Sales invoices (AR301000) window.
You can then apply the prepayment to other invoices and adjustments.

To view information about prepayments, you use the following windows:

• Supplier details (AP402000): Shows prepayment balances.
• Supplier details (AP402000): Displays the prepayment balance and particular prepayments by supplier.
• Balance by GL account (AP63200S): Shows all prepayments collected on the prepayment account.

Correcting errors on prepayments depends on how you entered them.

To void a prepayment created in the standard way, you have the following options:

• If the prepayment has not been paid, void it by clicking Void in the window toolbar of the Purchase invoices (AP301000) window for the selected prepayment.
• If errors are detected for a paid prepayment, create an adjustment instead of voiding the prepayment.

• If the prepayment has been paid, you void the associated supplier ledger payment.

To void a prepayment created using the simplified method:

• First locate the prepayment in the Customer payments (AR302000) window. Then, click Void on the window toolbar.

• If the prepayment has already been applied, you must first unapply it before voiding.

• If a supplier did not use the prepayment or used it only partially, you can enter a refund and apply it against the prepayment.