Advance payment invoicing
Once we have seen the previous configuration and how advance payments work, we are going to see how to proceed with the vendor prepayment invoices and how these are linked to the purchase orders that originate them.
To do this, we will access to a purchase order, for example from Accounts payable > Purchase orders > All purchase orders, and through the action Advance payments, from the Purchase order form menu, we’ll introduce the data to generate the prepayment invoice:
As shown in the previous screenshot, we can enter a Description, select between a Fixed amount or a Percentage of the total amount of the purchase order, and we must select the Procurement category to which the advance payment will be assigned (this is the prerequisite we indicated in the first point).
To post the invoice for these advance payments, from the Invoice menu and through Prepayment invoice action, we’ll proceed to generate the prepayment invoice, as shown below:
After posting, in addition to generating a vendor invoice for the prepayment amount, a record is created in Open prepayments form:
The next step, once the prepayment has been generated from the purchase order, is to pay it.
To do this, and from Open prepayments form, roll the New menu to create and register a payment journal for the amount of the advance through the Vendor payment journal menu option:
As we can see in the previous screenshots, without moving from Open prepayments form, and through the menu option New > Vendor payment journal, we can create and post the payment journal to settle the invoice, and all this without wasting an extra click accessing the Payment journal from the module menu.
So, it’s clear that from Open Prepayments form, we can centralize the information and actions regarding vendor prepayment invoices.
We can notice that in the same New menu, we could create the prepayment invoice for the selected line, in case we hadn’t done it from the purchase order, through the option Prepayment invoice that is the same option we could see in the Purchase order form.
Continuing with the Vendor Payment Journal, once posted, we close it to get back to the Open Prepayments form, and after updating the information, we can see how the amount paid acquires the status of “Unposted paid amount”:
This status means that an invoice was generated and an prepayment was made, but it hasn’t yet been applied/settled with any purchase invoice.
Once we have this amount, in order to make new prepayments and generate more invoices for this concept, we can access to the purchase order again (by clicking on the link of the order ID in the same line, at the “Purchase order” column, we can access directly), and repeat the action Prepayments.
When we execute this option again, we will have to indicate a value greater than the initial one in order to make a new advance payment on the same purchase order.
For example, let’s imagine the case in which our vendor issues an invoice prepayment of 15% when formalizing the purchase. Then, at the beginning of the manufacturing process of an item we want to buy, he sends us a new prepayment invoice with an additional 15% for the procurement of materials..
In this case, we would access to the order and click on Prepayments to enter the new percentage, this time 30%. This corresponds to the additional 15% for the procurement in our example.
When the system launching the Prepayments dialogue, will show us through the Limit field the amount that represents this 30% of the total order. In addition, the field Prepayment remaining will show us the part pending to be invoiced and paid (this additional 15%). And lastly, Prepayment application remaining informs us of the amount that has already been paid previously:
Again, to post a new invoice for this additional prepayment, we will repeat the invoicing process through Prepayment Invoice:
Back to Open prepayments form, you will notice that the amount shown under Prepayment amount column has increased and there’s a new Unpaid prepayment amount:
We’ll repeat the payment posting by creating a new Vendor payment journal for the amount that figures on the Unpaid prepayment amount column, after which Unposted paid amount will increase until it again equals the Prepayment amount: