Supplier Prepayment - General

There are different way of recording this. Each supplier has a default system 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 PO here.

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 "supplier prepayment" to bring up a list of accounts or type in the supplier name. Choose the account with the supplier's name in it.  Put the amount being prepaid at the amount for the new bill item.  Use the Post and Pay area at the bottom of the bill page to post the payment you are making.
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.

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.