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Prepayments in Accounts Payables

Problem Details:

How do prepayments work in AP?

 

Solution:

It is often necessary to make a payment to a vendor in advance of receiving their invoice, or receiving the goods from them.  This can be processed as a 'Prepayment' in Accounts Payables. 

Open the Payment Batch list and create a new entry.  Select 'Prepayment' as the Transaction Type (see Transaction Types in AP Payments).  When this option is selected, the screen will change to show different fields.  Enter the Payment & Posting Dates, and select the vendor number if applicable.  If no vendor number exists, enter the payee's name in the Remit To field. Enter the amount of the cheque in the Vendor Amount field. 

The 'Apply By' and 'Apply To' fields relate to each other.  This prepayment can be automatically applied to a specific document by filling in these fields.  In the future, when that specified document is posted, it will then be automatically paid by the prepayment.   Or, if the document has already been posted in Sage, then this prepayment can be automatically applied to it.  Select to 'Apply By' Document Number (invoice), PO Number, or Order Number.  Then select the document from the finder (if that document has already been posted) or enter in the document number (if the document has not yet been posted) into the 'Apply To' field.  The Activation Date is the date on which to include the prepayment when calculating amounts due for payment to this vendor. 

Add the entry, print the cheque and post. 

If the document in the 'Apply To' field is posted after the prepayment is posted AFTER the prepayment is posted, then it will be automatically 'paid' by the prepayment provided the document numbers match exactly.  In the example below:

an invoice with the number IN45698 will be automatically paid by this prepayment (at the time of posting the invoice), but if the invoice were entered with the number INV45698, the prepayment would not apply.  In this case, the prepayment could still be applied to this invoice, but an additional Payment Entry would need to be done, using the 'Apply Document' Transaction Type to manually apply the prepayment to the invoice.  This additional step would also be required if the prepayment were posted with the 'Apply To' field left blank.

 

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