Supplier Prepayment: How to make a supplier prepayment without a Purchase Order

Versa Cloud ERP enables users to make prepayments to the Supplier without a purchase order, which they can then apply to other bills from the same supplier.

Step I:

Record Prepayment:

1. Create a Manual GL transaction: To record a prepayment, the user can credit the cash account and debit the supplier prepayment account

Cash Account------------------------------ Debit

Supplier Prepayment Account---------Credit

1. Create a Bill: Alternatively, the user can create a bill and select the GL account for the Supplier Prepayment.

Step II. 

If the user created a bill to record the prepayment, this prepayment needs to be paid. To record the actual payment, the user can go to Bills>Make Payment> and pay the prepayment bill as per the process.

This is an additional step the user has to follow while creating a bill for supplier prepayment, as it needs to be recorded in Versa that an actual cash payment is made. Whereas, in the first case, where a manual GL entry is created, it already records the prepayment against cash, showing a cash outflow.

Step III. 

The user can now create a PO, receive it, and create a bill linked to the shipment.

Step IV. 

Now the user wants to use the prepayment balance to pay the new bill created from the PO. To record this, the users need to go to Bills>Make Payment> and choose ‘Apply Prepayment’ from the Pay from Account drop-down> select the date> select the currency>Put in a multiplier (if required)> select the supplier> and select ‘Prepayment Applied’ as the Prepayment Method. This will auto-populate the amount available to the user in the Prepayment Balance Field.

Now the user can apply the amount to the bill and post the payment.

Please Note: The amount to ‘Apply’ needs to be either equal to or less than the prepayment balance.

This is because the prepayment balance account is like a ‘wallet’, you can only pay what you have in your wallet or less, but you cannot pay more.

Like in the screenshot above, the prepayment (wallet) balance available is 500$, and the bill that the user needs to apply it to is for 1000$, which means the user can pay a maximum of 500$ only; therefore, in the apply field, the user needs to fill the $ value accordingly.

Step V. 

Once the prepayment balance is applied, the supplier's prepayment balance will be reduced, and the bill the balance is applied to will also be reduced by the value of the prepayment.