Back to D200: Inventory Order Management Extended Scenarios

Lesson 10: Processing Prepayments for Purchase Orders

Part 3: Extended Sales and Purchase Scenarios

This lesson explains how you can create and process prepayments for purchase orders and how these prepayments

are applied to accounts payable bills.

Prepayments for Purchase Orders: General Information

Diﬀerent vendors have diﬀerent conditions for supplying goods and services. A vendor may request that your company pay a part of the order amount in advance before those goods or services are provided. To support this process in Acumatica ERP, you can process a prepayment for the purchase order; this prepayment is later automatically applied to the AP bill prepared for the vendor of goods or services.

Learning Objectives

In this lesson, you will do the following:

Change the default prepayment amount for a vendor
Create a prepayment request for a purchase order
Create a prepayment from a prepayment request
Apply a prepayment to an accounts payable bill created for a purchase order
Process a single prepayment for a purchase order
Process multiple prepayments for a purchase order

Applicable Scenarios

You may want to create and process a prepayment in the following cases:

You are processing a new purchase order for the vendor that requires a partial payment in advance before the ordered items will be sent.
You have corrected the details of an existing purchase order that was already prepaid, so that an extra prepayment amount needs to be processed.

Prepayments for Purchase Orders

To process a prepayment in the system, you have to first create and release the prepayment request, which denotes the vendor's request for prepayment in the system. A prepayment request is not a financial document; it is an internal document that can be approved (if required in your system) before the prepayment is actually paid to the vendor. In general, the Purchase Orders (PO301000) form is the starting point for creating a prepayment request for a particular purchase order. You can create prepayment requests for purchase orders of the Normal and Drop-Ship types. On the More menu of the Purchase Orders form, you click Create Prepayment Request. On the Bills and Adjustments (AP301000) form, which opens, you specify the quantity and extended cost in each of the prepayment request lines. The total amount of prepayments prepared for a purchase order cannot exceed the total amount of the purchase order. Aer you have specified the details, you release the prepayment request. A prepayment request does not generate general ledger transactions and does not change the vendor balance.

          If approval is required in your system, the prepayment request must be approved on the Approve Bills
          for Payment (AP502000) form before it can be paid. For details on approval configuration, see Approval
          Configuration: Approval Maps.

To create a prepayment document from a prepayment request, you need to pay the prepayment. A prepayment request is always paid in the full amount; you cannot pay it partially. To pay the prepayment, you prepare an accounts payable payment on the Checks and Payments (AP302000) form, apply it to the prepayment request, and release the payment along with the application; depending on the system settings, processing a payment may require you to print it before releasing it. Aer you apply the AP payment to the prepayment request, the system changes the status of this payment to Closed and changes the status of the original prepayment to Open. Also, a document with the Prepayment type and the same reference number as that of the original prepayment request becomes available on the Checks and Payments form. Then you can apply this prepayment to bills and credit adjustments prepared for the vendor of the goods. Once the purchased items have been received to inventory, you create a purchase receipt on the Purchase Receipts (PO302000) form and an accounts payable bill on the Bills and Adjustments form.

          Depending on the vendor's settings, you may need to process the bill before the receipt or the receipt
          before the bill. The prepared prepayment document is automatically applied to the accounts payable
          bill; on release of the AP bill, the prepayment is applied to the bill.

On release of the prepayment application to the bill, a batch of general ledger transactions is posted. The open balance of the bill is decreased by the balance of the applied prepayment.

Workflow of Purchase with Prepayment

The following diagram illustrates the workflow of processing a purchase with prepayment. Part 3: Extended Sales and Purchase Scenarios | 81

Prepayments for Purchase Orders: Calculation of the Prepayment Amount

In some cases, you need to prepay a percent of the cost of a purchase order before the vendor produces, ships, or delivers the goods to your company. While you are working with the purchase order on the Purchase Orders (PO301000) form, you can click Create Prepayment Request on the More menu. The system opens the Bills and Adjustments (AP301000) form with a new prepayment request linked to the purchase order, with the lines of the purchase order copied to the Details tab and the prepayment amount inserted in each prepayment request line. To simplify the creation of prepayment requests for purchase orders, you can define a standard percentage of the prepayment amount for the applicable records (those that correspond to a particular requirement for a prepayment); these default percentages can be used in the appropriate situations for calculating the prepayment amount in prepayment request lines. You can specify a default prepayment percent for the following records:

A particular purchase order: On the Vendor Info tab of the Purchase Orders form, specify this percent in the Prepayment Percent box.
A stock item purchased by a specific vendor: On the Vendors tab of the Stock Items (IN202500) form, in a row with this vendor selected, specify this percent in the Prepayment Percent column.
A non-stock item purchased by a specific vendor: On the Vendors tab of the Non-Stock Items (IN202000) form, in a row with this vendor selected, specify this percent in the Prepayment Percent column.
A particular vendor: Specify this percent in the Prepayment Percent box on the Payment tab of the Vendors (AP303000) form. For each line of the prepayment request, the system calculates the value in the Prepayment Amount column by using the value in the Prepayment Percent column. The system checks related system settings in the following order and uses the first source value it finds:

If a default prepayment percent is specified in the settings of a purchase order for which the prepayment request is prepared, the system inserts this percentage for the line (regardless of the applicable vendor and item settings).
If a default prepayment percent is specified in the settings of the stock item or non-stock item selected in the line, the system inserts this percentage for this line (regardless of the applicable vendor settings).
If a default prepayment percent is specified for the vendor selected for this prepayment, the system inserts this percentage for this line.
If a default prepayment percent is not specified for any of these system settings, the system inserts 100 as the default value, which indicates that the full amount of the purchase order line should be inserted in the related line of a prepayment request. You can manually override the default prepayment percent that the system has inserted into any line to change the prepayment amount on the Bills and Adjustments form; also, you can delete any of the lines copied from the original purchase order to exclude them from prepayment.

Prepayments for Purchase Orders: Implementation Activity

In the following implementation activity, you will learn how to specify a default prepayment percentage for a particular vendor and stock item.

Story

Suppose that SweetLife buys eco-friendly reusable bags with personalized logos from the Ginkgo Tree Printing Company vendor. The vendor notifies the SweetLife company that future orders will need to be partially paid in advance before the vendor starts to manufacture the goods for the order. The vendor requests that your company pay 15% of any order in advance, and for ecobags, the vendor instead requests a prepayment of 25%. Acting as implementation manager Kimberly Gibbs, you need to specify the vendor settings so that the prepayment amount will be automatically filled in for each newly created prepayment.

System Preparation

Before you start making changes to the settings of the vendor and stock item, you should launch the Acumatica ERP website with the U100 dataset preloaded, and sign in as implementation manager Kimberly Gibbs by using the gibbs username and the 123 password.

Step 1: Editing the Vendor Settings To update the vendor account with the prepayment percent, do the following:

On the Vendors (AP303000) form, open the GINKGO vendor.
On the Payment tab, specify 15 in the Prepayment Percent box.
On the GL Accounts tab, make sure that 13200 - Deposit to Vendor is selected in the Prepayment Account box.
On the form toolbar, click Save.

Step 2: Editing the Stock Item Settings To specify the prepayment percent of the ECOBAG stock item when it is included in a purchase order for the GINKGO vendor, do the following:

On the Stock Items (IN202500) form, open the ECOBAG item.
On the Vendors tab, click Add Row.
Specify the following settings in the added row:

Active: Selected
Vendor ID: GINKGO
Prepayment Percent: 25.

On the form toolbar, click Save.
You have specified the default prepayment settings for the GINKGO vendor and item-specific prepayment settings for the ECOBAG stock item.

Prepayments for Purchase Orders: To Process a Prepayment

In the following activity, you will create a prepayment request for a purchase order, make a payment based on the prepayment request, and apply the prepayment to an AP bill.

Story

Suppose that the SweetLife Fruits & Jams company has ordered a large quantity of eco-friendly reusable bags with the company's logo for SweetLife’s needs. The Ginkgo Tree Printing Company vendor has requested an advance payment in the amount of $500. Acting as purchasing manager Regina Wiley, you have to enter the purchase order and record a request for a prepayment. You then need to make a payment for the prepayment request, process the purchase order to completion, and make sure that the prepayment was applied to the bill created for the purchase order.

Configuration Overview

In the U100 dataset, for the purposes of this activity, the following tasks have been performed:

On the Enable/Disable Features (CS100000) form, the following features have been enabled:
Inventory and Order Management, which provides the standard functionality of inventory and order management
Inventory, which gives you the ability to maintain stock items by using forms related to the inventory functionality and to create and process sales and purchase documents that include stock items
On the Vendors (AP303000) form, the GINKGO (Ginkgo Tree Printing Company) vendor has been created. The Allow AP Bill Before Receipt check box has been selected for the vendor on the Purchase Settings tab (which means that for this vendor, accounts payable bills can be processed before purchase receipts).
On the Stock Items (IN202500) form, the ECOBAG stock item has been created.

Process Overview

In this activity, you will start with creating a purchase order on the Purchase Orders (PO301000) form and adding the purchased item to it. Then you will create a prepayment request by clicking Create Prepayment Request on the More menu; on the Bills and Adjustments (AP301000) form, you will specify the prepayment amount for the line copied from the purchase order. To create a prepayment document from the prepayment request, you will pay the prepayment by clicking Pay/Apply on the More menu of the Bills and Adjustments form; you will review the prepared payment on the Checks and Payments (AP302000) form. Then you will print a check and release the payment. To complete the processing of the purchase order, you will create a purchase receipt for the ordered items on the Purchase Receipts (PO302000) form and an accounts payable bill to the vendor on the Bills and Adjustments form. On release of the AP bill, the system automatically applies the prepayment to the bill and updates the vendor's balance.

System Preparation

Before you start processing a prepayment, you should do the following:

Make sure that you have completed the Prepayments for Purchase Orders: Implementation Activity.
Launch the Acumatica ERP website with the U100 dataset preloaded, and sign in as purchasing manager Regina Wiley by using the wiley username and the 123 password.
In the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, make sure that the business date in your system is set to today’s date. For simplicity, in this activity, you will create and process all documents in the system on this business date.
On the Company and Branch Selection menu, in the top pane of the Acumatica ERP screen, make sure the SweetLife Head Oﬀice and Wholesale Center branch is selected.

Step 1: Creating the Purchase Order To create the purchase order, do the following:

On the Purchase Orders (PO301000) form, add a new record.
In the Summary area, specify the following settings:

Type: Normal
Vendor: GINKGO
Description: Purchase of eco-friendly bags with company logo

On the Details tab, click Add Row.
Specify the following settings in this row:

Branch: HEADOFFICE
Inventory ID: ECOBAG
Warehouse: WHOLESALE
Order Qty.: 15
Unit Cost: 250

On the form toolbar, click Remove Hold to save the purchase order and prepare for further processing.

Step 2: Creating a Prepayment Request To prepare a prepayment request for the purchase order, do the following:

While you are still viewing the purchase order on the Purchase Orders (PO301000) form, on the More menu, click Create Prepayment Request.
On the Bills and Adjustments (AP301000) form, which opens, in the only line of the prepared prepayment request, specify the following settings:

Ext. Cost: 2000
Account: 81000 - Other Expenses

Make sure that the calculated Prepayment Amount is 500 in the prepayment request line.
On the form toolbar, click Remove Hold.
Click Release on the form toolbar to release the prepayment request.
You have created a prepayment request to make the prepayment to the vendor.

Step 3: Creating a Payment to Pay for the Prepayment Request To prepare an AP payment to pay the vendor in the prepayment amount, do the following:

While you are still viewing the prepayment request on the Bills and Adjustments (AP301000) form, on the form toolbar, click Pay/Apply.
On the Checks and Payments (AP302000) form, which opens, review the payment and verify that it has the following settings in the Summary area:

Type: Payment
Vendor: GINKGO
Payment Method: CHECK
Cash Account: 10200WH - Wholesale Checking
Payment Amount: 500

Change Description to Prepayment for eco-friendly bags with company logo.
On the Documents to Apply tab, make sure that the following settings are specified in the only row:

Document Type: Prepayment
Reference Nbr.: The reference number of the prepayment document you created in Step 2
Amount Paid: 500

On the form toolbar, click Remove Hold.
Click Save. The payment is assigned the Pending Print status, which means that it requires printing before it can be released. Step 4: Processing the Payment To apply the payment to prepayment request, do the following:
While you are still viewing the payment on the Checks and Payments (AP302000) form, on the form toolbar, click Print/Process.
On the Process Payments / Print Checks (AP505000) form, which opens, notice that the system has added a row with the payment and selected the unlabeled check box for it. On the form toolbar, click Process. A new browser tab opens showing a printable check for the selected payment.

Review the printable check for the payment. Notice that the check has 500 as the Payment Amount.

              In a production system, you would print out the payment.


   Close the browser tab.

On the Release Payments (AP505200) form, which opens, click Process. The Processing dialog box opens. Wait for the system to complete the operation.
Click Close to close the dialog box.
You have created a payment and applied it to the prepayment request you created earlier. Now the prepayment is ready to be applied to the vendor's bill.

Step 5: Processing the Accounts Payable Bill with the Prepayment To create an accounts payable bill for the purchase order, do the following:

On the Purchase Orders (PO301000) form, open the purchase order that you created in Step 1.
On the More menu, click Enter AP Bill. The system creates an accounts payable bill for the vendor of the goods and opens the created document on the Bills and Adjustments (AP301000) form.

Review the details of the prepared bill.

              In a production environment, you would make sure that the details of the bill created in the
              system correspond to the details of the document that was received from the vendor.

On the Applications tab, make sure that the line with the prepayment has been automatically added to the table and that 500 has been specified in the Amount Paid column.
On the form toolbar, click Remove Hold, and then click Release to release the bill. Make sure that the bill now has the Open status and that the bill's open balance has been decreased by the prepaid amount (see the following screenshot). Figure: Prepayment applied to the bill prepared for the purchase order
You have applied the prepayment that you made for the vendor to the vendor's bill and released the application.

Step 6: Processing the Purchase Receipt Now you need to complete the processing of the purchase order. To create the purchase receipt for the purchase order, do the following:

Return to the purchase order to GINKGO on the Purchase Orders (PO301000) form, which still has the Open status, and review the Prepayments tab. Notice that the prepayment is now closed and that the full amount of the prepayment was applied to the order and is shown in the Applied to Order column.
On the form toolbar, click Enter PO Receipt. The system prepares the purchase receipt for the selected purchase order and opens it on the Purchase Receipts (PO302000) form.
In the Summary area, make sure the Create Bill check box is cleared because you have already prepared a bill for the entire quantity.
On the form toolbar, click Release.
On the Orders tab, make sure that the related purchase order now has the Closed status.

Prepayments for Purchase Orders: To Process Multiple Prepayments for a Purchase

Order

In the following activity, you will prepare multiple prepayments for a single purchase order, and apply these prepayments to an AP bill prepared for the vendor.

Story

Suppose that on January 30, 2025, the SweetLife Fruits & Jams company has ordered a large quantity of eco- friendly reusable bags for SweetLife’s needs. The Ginkgo Tree Printing Company vendor has requested an advance payment in the amount of $500. Suppose that on February 7, 2025, the vendor notifies you that an additional prepayment in the amount of $200 is needed for the order. Also suppose that the first prepayment request has not been paid yet. Acting as Regina Wiley, a purchasing manager in SweetLife, you have to enter the purchase order and record the prepayment request. Then you need to create the second prepayment for the same purchase order, and pay both prepayment requests with the same payment. Finally, you need to process the order to completion and make sure that both prepayments have been applied to the AP bill that you prepare for the purchase order.

Configuration Overview

In the U100 dataset, for the purposes of this activity, the following tasks have been performed:

On the Enable/Disable Features (CS100000) form, the following features have been enabled:
Inventory and Order Management, which provides the standard functionality of inventory and order management
Inventory, which gives you the ability to maintain stock items by using forms related to the inventory functionality and to create and process sales and purchase documents that include stock items
On the Vendors (AP303000) form, the GINKGO (Ginkgo Tree Printing Company) vendor has been created. The Allow AP Bill Before Receipt check box has been selected for the vendor on the Purchase Settings tab (which means that for this vendor, accounts payable bills can be processed before purchase receipts).
On the Stock Items (IN202500) form, the ECOBAG stock item has been created.

Process Overview

In this activity, to process a purchase order when multiple prepayments are required, you will start with creating a purchase order on the Purchase Orders (PO301000) form and adding the purchased items to it. Then you will create the first prepayment request by clicking Create Prepayment Request on the More menu; on the Bills and Adjustments (AP301000) form, you will specify the prepayment amount for each line copied from the purchase order. Then you will create a subsequent prepayment request, and release both prepayment requests on the Release AP Documents (AP501000) form.

Then you will pay two prepayment requests with a single AP payment; you will do this by clicking Pay/Apply on the More menu of the Bills and Adjustments form while viewing one of the prepayment requests, and adding the second prepayment request to the payment on the Checks and Payments (AP302000) form. Then you will print a check, and release the payment and its application to two prepayment requests. To complete the processing of the purchase order, you will create a purchase receipt for the ordered items on the Purchase Receipts (PO302000) form, and an accounts payable bill to the vendor on the Bills and Adjustments form. On release of the AP bill, the system will automatically apply the prepayments to the bill and update the vendor's balance.

System Preparation

Before you start processing a purchase order when multiple prepayments are required, you should do the following:

Make sure that you have completed the Prepayments for Purchase Orders: Implementation Activity.
In the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, make sure that the business date in your system is set to 1/30/2025. If a diﬀerent date is displayed, click the Business Date menu button and select 1/30/2025 on the calendar. For simplicity, in this activity, you will create and process all documents in the system on this business date.
On the Company and Branch Selection menu, in the top pane of the Acumatica ERP screen, make sure the SweetLife Head Oﬀice and Wholesale Center branch is selected.

Step 1: Creating the Purchase Order To create the purchase order to the GINKGO vendor, do the following:

On the Purchase Orders (PO301000) form, add a new record.
In the Summary area, specify the following settings:

Type: Normal
Vendor: GINKGO
Date: 1/30/2025
Promised On: 1/30/2025
Description: Purchase of eco-friendly bags with company logo

On the Details tab, add a row with the following settings:

Branch: HEADOFFICE
Inventory ID: ECOBAG
Warehouse: WHOLESALE
Order Qty.: 15
Unit Cost: 250

On the form toolbar, click Remove Hold to save the purchase order and prepare for further processing.

Step 2: Creating Prepayment Requests To prepare the two prepayment requests for the purchase order, do the following:

While you are still viewing the purchase order on the Purchase Orders (PO301000) form, on the More menu, click Create Prepayment Request.
On the Bills and Adjustments (AP301000) form, which opens, in the only line of the prepared prepayment request, specify the following settings:

Ext. Cost: 2000
Account: 81000 - Other Expenses

Make sure that the calculated Prepayment Amount is 500 in the prepayment request line.
On the form toolbar, click Remove Hold.
On the form toolbar, click Release to release the prepayment request.
Close the prepayment request and return to the purchase order on the Purchase Orders form.
On this form, review the Prepayments tab. The line with the prepared prepayment request in the amount of $500 is shown in the table.
In the info area, in the upper-right corner of the top pane of the Acumatica ERP screen, click the Business Date menu button, and select 2/7/2025 from the calendar to change the business date.
On the More menu, click Create Prepayment Request. 10.On the Bills and Adjustments form, which opens, in the only line of the prepared prepayment request, specify the following settings:

Ext. Cost: 800
Account: 81000 - Other Expenses 11.Make sure that the calculated Prepayment Amount is 200 in the prepayment request line. 12.On the form toolbar, click Remove Hold. 13.On the form toolbar, click Release to release the prepayment request.

Step 3: Creating a Payment to Pay for the Prepayment Requests To prepare an AP payment for both prepayment requests, do the following:

On the Bills and Adjustments (AP301000) form, open the $500 prepayment request that you have prepared for the purchase order.
On the form toolbar, click Pay/Apply.
On the Checks and Payments (AP302000) form, which opens, review the payment and verify that it has the following settings in the Summary area:

Type: Payment
Vendor: GINKGO
Payment Method: CHECK
Cash Account: 10200WH - Wholesale Checking
Application Date: 2/7/2025
Application Period: 02-2025

Change Description to Prepayments for eco-friendly bags with company logo.
Change the value of the Payment Amount box in the Summary area to 700. Notice that in the Unapplied Balance box, the value changes to 200.
On the Documents to Apply tab, verify the details of the row with the following settings:

Document Type: Prepayment
Reference Nbr.: The reference number of the $500 prepayment that you created in Step 2
Amount Paid: 500

On the table toolbar, click Add Row. In the new row, do the following: a. In the Document Type column, select Prepayment. b. In the Reference Nbr. column, select the reference number of the $200 prepayment you created in Step
1. On the form toolbar, click Remove Hold. The payment is assigned the Pending Print status, which means that a check needs to be printed before the payment can be released.

Step 4: Processing the Payment To apply the payment to the prepayment requests, do the following:

While you are still viewing the payment on the Checks and Payments (AP302000) form, on the form toolbar, click Print/Process.
On the Process Payments / Print Checks (AP505000) form, which opens, notice that the system has added a line with the payment and selected the unlabeled check box for it.
On the form toolbar, click Process. A new browser tab opens showing a printable check for the selected payment.

Review the printable check for the printed payment. Notice that the check has 700 as Payment Amount.

              In a production system, you would print out the check.


   Close the browser tab.

On the Release Payments (AP505200) form, which opens, click Process to process the line for which the unlabeled check box was selected automatically. The Processing dialog box opens. Wait for the system to complete the operation.
Click Close to close the dialog box. Notice that the line with the payment is no longer displayed in the table.
You have created a payment and applied it to the prepayment requests that you created earlier. Now the prepayment is ready to be applied to the vendor's bill. Step 5: Processing the Accounts Payable Bill with the Prepayments To create an accounts payable bill for the purchase order, do the following:
On the Purchase Orders (PO301000) form, open the purchase order that you have created earlier in this activity.
On the Other tab, review the amount in the Unpaid Amount box: It is the order total in the Summary area minus the prepaid amount in the only line on the Details tab.
On the More menu, click Enter AP Bill. The system generates an accounts payable bill for the vendor of the goods and opens the bill on the Bills and Adjustments (AP301000) form.
On the Applications tab, make sure that two lines with the prepayments have been automatically added to the table. Make sure that in each line, the Amount Paid equal to prepayment balance is specified ($500 and $200, respectively).
On the form toolbar, click Remove Hold.
Click Release to release the bill. Make sure that the bill now has the Open status, and that the bill's open balance has been decreased by the prepaid amount (see the following screenshot).
```
   Figure: Prepayments applied to the bill prepared for the purchase order
```
You have applied the prepayments you made for the vendor to the vendor's bill and released the application.

Step 6: Processing the Purchase Receipt Now you need to complete the processing of the purchase order. To create the purchase receipt for the purchase order, do the following:

Return to the purchase order to GINKGO on the Purchase Orders (PO301000) form, which still has the Open status, and open the Prepayments tab. Notice that the prepayments are now closed and that the full amount of the prepayments has been applied to the order (as the Applied to Order column displays).
On the form toolbar, click Enter PO Receipt. The system prepares the purchase receipt for the selected purchase order and opens it on the Purchase Receipts (PO302000) form. In the Summary area, make sure the Create Bill check box is cleared (because you have already prepared a bill for the entire quantity).
On the form toolbar, click Save.
Click Release.
On the Orders tab, make sure that the related purchase order now has the Closed status.