There are times when you need to pay your vendor a deposit on a purchase order (or in full), before receiving actual items. The vendor may require that deposit before shipping you the goods. Acumatica allows for prepayments to be applied to a Purchase Order, paid to the vendor, and then deduct from the balance due on the AP Bill, once created from the PO Receipt. For this example, let’s say we need to pay a $1500 deposit on a $4000 PO.
Here are the steps for this process:
- Go to the Purchases module, then Purchase Orders (under Transactions), and enter the PO as you normally would:
- Take the Purchase Order off hold, by unchecking the “Hold” checkbox. (You cannot create a Prepayment for this PO with a Hold status):
- Verify the Status has changed to “Open,” then click “Actions,” and “Create Prepayment Request.”
- This will take you to the Bill and Adjustment entry screen and will automatically create a new document with a “Prepayment” document type, on hold. The amount will be for the full amount of the purchase order:
- You can now modify the Ext. Cost on the line to match the amount of the prepayment (deposit) owed to the vendor. Then take it off hold. The status changes to “Balanced”:
- Release the Prepayment using the RELEASE button at the top of the screen. This will put the prepayment as an open document to pay for this vendor. It also shows on the Aging as an open Prepayment.
- Now, pay the prepayment, by printing checks. Select the Prepayment for payment, and print/send the check to the vendor:
- Review the original purchase order. On the Prepayments tab, you will see the Prepayment linked to this PO, and the status shows as “Open,” telling you it has not yet been applied to an AP Bill:
- The Prepayment status is now “Open” and can be applied to the AP Bill for the purchase order, once created:
- Now receive the goods for the purchase order and create the AP Bill. Open the AP Bill and view it. You will see that the Prepayment shows on the Applications tab:
- Release the bill, and you will see the balance on the bill will be $2500. (The bill amount, minus the prepayment). When you go to pay the bill, it will be for only $2500, not the full $4,000:
Here’s the accounting effect during this entire process:
- Enter Purchase Order – No effect on the GL.
- Create Prepayment and release it – No effect on the GL.
- Pay the Prepayment – Debits Prepaid $1500, credits Cash $1500. (Prepayment account from the vendor):
- Receive the Purchase Order – Debits Inventory or Expense $4,000, credits PO Accrual account $4,000.
- Create the AP Bill, with Prepayment applied, and release – Debits PO Accrual $4,000, credits AR $4,000:
Also debits AP, credits Prepaid:
The net effect is a debit to Inventory for $4000, a credit to Cash for $1500, and a credit to AP for $2500.