Supplier Prepayment - General

There are different way of recording this. Each supplier has a default system GL account called supplier prepayment. This is an asset account. This account is to hold all the prepayment for this supplier.

 

 

See how to prepaid for amounts on a purchase order here.

 

 

Sometimes you would need to make a prepayment before any purchase order is created. This can be done as well.

When you are ready to make a prepayment to a supplier, you can record a GL transaction (credit cash and debit supplier prepayment). Or you can create a bill for the supplier, create a new bill item and under GL account , type in the name of the supplier to find its prepayment GL account. Choose the account with the supplier's name in it.  Put the amount being prepaid at the amount for the new bill item. 

Pay the bill following your current process by recording payment using one of your bank accounts.

You can view the current balance of this account for each supplier at the supplier record page. After the step above, this supplier would have a balance in its supplier prepayment account. Prepayment balances can be used to apply against future bills from the same supplier.

When you are ready to apply the prepayment against a bill, got to Bills, Make Payment. Under Pay from Account, choose APPLY PREPAYMENT. Then choose the currency. Any supplier who has prepayment balances will be listed under Supplier. Choose the supplier to view its current prepayment balance.  You can now choose to apply the prepayment against any open bills from this supplier. The total prepayment to be applied cannot be more than the amount owing on the bills to be paid.  After posting the payment, the balance of the supplier prepayment account will be reduced by the amount applied.