Applying Vendor Prepayment

Vendor prepayment is an advance payment for goods and services purchased. Usually, if the prepayment is recorded on a purchase order or is linked to a purchase order, it automatically gets applied when the bill is generated.

However, you can also manually apply the prepayment when paying a bill. For instance, if the prepayment amount exceeds the bill amount, or if multiple bills need to be paid using a single prepayment, the manual application becomes essential. Additionally, the manual application allows for greater flexibility and control over the allocation of prepayment amounts to specific bills.

Manually Applying a Prepayment to a Bill

To manually apply a prepayment to the bill, follow the steps below:

• Navigate to Bill > Options > Pay bill.

  
• On the "Bill Payment" screen, click on the amount listed under the "Credit" field.

  
• In the "Add Credit" module, select the Prepayments tab. You'll see the number of prepayments available displayed on the tab.

  
• To apply the prepayment to the entire bill amount, click on the "Tick" icon. If you wish to apply a specific prepayment amount, click on the number in the "Apply" column and input the desired amount.

  
• Proceed by clicking "Apply Credit" to apply the prepayment to the bill.

  
• Click on "Pay Bill" to complete the bill payment.

  

Important: If you're applying the prepayment at a later date, make sure to adjust the Payment Date to match the Bill Date. This is important for maintaining accurate financial and inventory records and ensuring that the payment reflects the correct billing period.

How to Unapply a Prepayment?

If a vendor prepayment has already been applied to a bill and needs to be removed, it must be unlinked by voiding the related Bill Payment record. Voiding the Bill Payment will automatically remove the applied prepayment from the bill.

To unapply a prepayment, follow the steps below:

Step 1: Open the required Bill that has been paid using an applied prepayment amount.

Step 2: Click the Options drop-down menu and select Show Payments.

Step 3: A new window will open displaying the Bill Payment Centre.

Step 4: Double-click on the relevant Bill Payment Number, and the Bill Payment screen will open.

Step 5: Click on the Options drop-down menu and select Void.

Step 6: Click OK to confirm the action. The Bill status will change from Paid to Open, and the applied prepayment will be unapplied.

FAQs

If the vendor is configured as prepaid, why can't the payment date be earlier than the receipt date?

By default, XoroERP validates the transaction dates to maintain the chronological order of purchasing and accounting records. As a result, a payment date cannot typically be earlier than the corresponding receipt date.

If your business process requires the linked bill receipt date to be earlier than the parent bill receipt date, enable the Allow Linked Bill Receipt Date Before the Parent's Bill Receipt Date application setting.

When this setting is enabled, XoroERP allows the linked bill receipt date to be recorded before the parent bill receipt date, providing greater flexibility for specific purchasing workflows.

Using Vendor Prepayments

If the vendor is configured as a Prepaid Vendor, it is recommended to record the advance payment as a Vendor Prepayment rather than creating a payment against the bill before receipt.

A Vendor Prepayment allows you to record an advance payment made to a vendor before the goods or services are received. The prepayment can then be applied to the vendor bill once it is created.