Prepayments in Accounts payable in Microsoft Dynamics 365 Finance and Operations One version

There are lot of business scenarios where prepayments in accounts payable are needed.

There are two kinds of prepayments options we can accomplish out of box in Microsoft Dynamics 365 Finance and Operations One version.

1) Prepayments (non PO based)

• when no invoice is raised by vendor
  • No prepayment invoice is raised
  • Liability is directly on actual vendor (balance)

2) PO based prepayment

• used when your vendor issues an invoice
  • Capture prepayment details on the PO on the purchase tab in ribbon
  • Raise a Prepayment invoice
    • Liability is in prepayment account and not in AP summary account in GL
    • Vendor balance reflects the prepayment and also seen in vendor transactions
  • Create a REGULAR vendor payment journal settling the prepayment invoice
  • Raise final invoice after receiving from vendor and USING actions: apply prepayment in the invoice posting time
  • Show the final vendor invoice due amount is reduced by the prepayment amount.

Sharing with visuals how to setup and leverage PO based prepayments

1) Provide prepayment posting profile

2) Vendor posting profile "PRE"

3) Capture prepayment details on a PO

4) Specify prepayment % or fixed amount and associate with a procurement category

5) Raise a prepayment invoice for the PO

6) Post prepayment vendor invoice

(Note the PO status would not be updated with prepayment invoice rather juts a vendor invoice using the prepayment posting profile would get posted)

7) Verify voucher posted to prepayment summary account in vendor posting profile

Below is the posting setup needed in item posting for prepayments

8) Generate vendor payment by applying the prepayment

Got to apply the prepayment to this regular invoice

Note* The prepayment procurement category shows up with negative line on the regular vendor invoice

9) Validate on original vendor invoice there is no outstanding if prepayment was 100%

Showing reversal of prepayment invoice postings

10) If there is no prepayment made and regular vendor invoice is posted then the prepayment invoice is reversed.

The regular invoice would now remain open.

11) If a prepayment was generated based on prepayment invoices and applied during regular invoice posting then the posting of regular invoice reverses the prepayment invoice and also applies the prepayment to the regular invoice.

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