Dynamics Community Forum Thread Details

Prepayment Journal Cannot Be Applied to Purchase Order Invoice

Hi everyone,

I have a question regarding the Prepayment Journal functionality in Dynamics 365 Finance.

My customer does not receive a prepayment invoice from the supplier. Instead, they make the payment based on a proforma. Following the Microsoft documentation below, I tried to use the prepayment journal approach:

https://learn.microsoft.com/en-us/dynamics365/finance/accounts-payable/prepayments-invoices-vs-prepayments

These are the steps I followed:

Created a Supplier Payment Journal and marked the payment as Prepayment.
Opened the Purchase Order and went to Invoice > Settle transactions.
Selected the prepayment journal that I posted in Step 1.
Created the supplier invoice as normal.

However, when I try to post the invoice, I receive the error message shown below.

If I remove the settlement in Settle transactions, the invoice posts successfully without any issue.

I have spent quite a long time searching for information about this functionality, but I haven't been able to find anyone experiencing the same issue.

I've checked document pending accounting page according to the error message, but nothing was there, I've ensured the supplier payment journal is fully posted on both purchase ledger and general ledger.

My understanding is that the expected process should be:

Create and post a supplier prepayment.
Apply the prepayment to the Purchase Order.
Post the supplier invoice.
The system automatically settles the prepayment against the invoice, rather than requiring a manual settlement afterwards.

Is my understanding correct? Has anyone experienced this issue before or knows if there are additional setup steps or prerequisites that I might have missed?

Any suggestions would be greatly appreciated. Thank you!