> For the complete documentation index, see [llms.txt](https://docs.xorosoft.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xorosoft.com/xoroerp-1/purchase/prepayment/vendor-prepayment/what-is-vendor-prepayment.md).

# 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.

{% hint style="info" %}
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.
{% endhint %}

### 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.


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