What is Vendor Prepayment?

A vendor prepayment is an advance payment recorded to a Vendor. Typically, this module is used in the case where you prepay on a Purchase Order. Once the corresponding bill for the preordered goods or services is generated, the prepayment can either be applied toward the bill or refunded.

Vendor Prepayment is a posting transaction, however, it does not affect the Accounts Payable account until the prepayment is applied to an item receipt or bill.

Vendor Prepayment Statuses

Vendor prepayments traverse through distinct statuses, each reflecting a different stage in the financial transaction lifecycle.

• Open: A prepayment that is neither applied to a bill nor refunded.

• Partially Applied: A prepayment that has some amount applied to a bill and may have some amount refunded.

• Applied: A prepayment that has been completely applied to the bill(s).

• Partially Refunded: A prepayment that has some amount refunded and no amount applied.

• Refunded: A prepayment that is completely refunded.

Vendor prepayments can be created in multiple ways:

Create an individual vendor prepayment

You can directly go to the vendor prepayment module and enter the information to create a vendor prepayment.

Create a vendor prepayment from a purchase order

You can record a vendor prepayment from a purchase order. To do that, go to Purchase Order > Options > Record Prepayment.