Vendor Prepayment is a scenario where the organization agrees to pay certain/full amount of purchases in advance to the vendor. In Ax 2012, Prepayment process is as follows:
- Create a PO
- Mark the PO a prepayment
- Post a Prepayment Invoice
- Post a Payment entry
- Settle the Payment against the Final Invoice.
In Ax 2012, the prepayment invoice can be created for a fixed amount or a percentage of the PO amount.
Below is the detailed explanation of the steps involved in the creation of the prepayment Purchase order.
Creation of purchase order;
Setup the prepayment;
After clicking Prepayment, a window will pop up, asking you to enter details regarding the prepayment. In the following screen print, we see that system provides 2 prepayment options; Fixed and Percent. In case of selection of option ‘Percent’, system calculates the percentage value based on the formula of (Net amount*Percentage)/100.
In case of selection of option ‘Fixed’, system picks the prepayment value as the Net amount of purchase order i.e. total value of purchase order.
Here we go with the option ‘Fixed’;
Post the prepayment invoice by clicking ‘Prepayment invoice’ button @ PO;
Once invoice is posted, navigate to vendor transactions form to confirm if payment transaction is correctly posted. Here we can see that vendor balance is due with the amount of 1000;
Make payment to vendor;
Navigate to payment journal by Accounts payable -> Journal -> Payment journal
Create a new journal and settle the prepayment transaction in Settle open transactions form;
Post the payment journal by click on Post button;
Check the vendor transactions to confirm if payment transaction is posted correctly. Here we can see that payment is made to vendor with the value of 1000 and there is no payment due to vendor;
Settle the payment against the final PO invoice
The final step of the prepayment process is to settle the payment against the final invoice. To accomplish this, first go to Purchase Order and Receive the Products, and then go to the Invoice section and click Invoice. When you’re on the opened form, click Apply Prepayment ;
After clicking Apply Prepayment, a screen will open to show the prepayment amount that can be applied to the Invoice Amount (of the purchase order). The “Available application amount” field indicates the prepayment amount;
After prepayment is applied and posted, navigate back to vendor transactions and check if there is new liability created against vendor. In following screen print, we see that there is no new liability transaction created against vendor and vendor balance remains 0 since prepayment was already made to the vendor;
Vendor balance form;