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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / How to post an advance...
Small and medium business | Business Central, N...
Suggested answer

How to post an advance payment//prepayment or purchase credit memo without an actual purchase?

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Posted on by RH 194
Sometimes the client will deposit/advance an amount of money with the vendor and gradually use as credits when they see fit. So this is without first having any purchase orders.
This is their way of prepaying. Then when orders are made they will apply the credits. 

I tried the Purchase Credit Memo way by placing funds into a G/L on the Line. However when I go to post payment and apply entries. I can apply the credit on Payment Journals but it only posts the totals from AP/Bank and leaves the funds in the G/L that I placed the advanced payment in.
 
Is there a way around this?
 
Thanks!
  • CU15100832-0 Profile Picture
    CU15100832-0 4 on at
    How to post an advance payment//prepayment or purchase credit memo without an actual purchase?
     
    Sometimes the client will deposit/advance an amount of money with the vendor and gradually use as credits when they see fit. So this is without first having any purchase orders.
    This is their way of prepaying. Then when orders are made they will apply the credits. 

    I tried the Purchase Credit Memo way by placing funds into a G/L on the Line. However when I go to post payment and apply entries. I can apply the credit on Payment Journals but it only posts the totals from AP/Bank and leaves the funds in the G/L that I placed the advanced payment in.
     
    Is there a way around this?
     
    Thanks!
    Record the advance payment by creating a Vendor Payment in the Payment Journal and posting it to a prepayment account (G/L). Apply the credit to invoices when the vendor sends them by using the "Apply Entries" function in the Payment Journal. Clear the prepayment account by applying the advance payment to the actual invoice later.
  • Suggested answer
    Jun Wang Profile Picture
    Jun Wang 7,624 Super User 2025 Season 1 on at
    How to post an advance payment//prepayment or purchase credit memo without an actual purchase?
    you don't need to use purchase credit memo in this situation. you could do the following
     
    create a payment from payment journal to that vendor without applying the payment to any invoice. After posting, BC will create a payment line on that vendor ledger entry, the payment status shows Open, meaning it could be applied to any purchase invoice for that vendor.
     
    when you want to use that payment to close an invoice, just use apply entries from the vendor ledger entries page and apply it to an invoice. If the invoice is 100, and that payment is 10, the payment line will be closed and the invoice will have 90 as balance yet to be paid.
     
    this is a simple BC feature
    Jun Wang
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 26,795 Super User 2025 Season 1 on at
    How to post an advance payment//prepayment or purchase credit memo without an actual purchase?
    Unless I am missing something I don't see the credit memo method working without gaps. I.e. in the customer subledger you have a credit memo for the deposit and a payment for the credit memo applied to each other so both are closed. But now the invoice is posted and only partially paid as the remainder of the payment was paid with the credit memo. But this portion of the payment is not applied to the invoice as its applied to the credit memo, so the invoice will sit there open.
     
  • Suggested answer
    YUN ZHU Profile Picture
    YUN ZHU 78,980 Super User 2025 Season 1 on at
    How to post an advance payment//prepayment or purchase credit memo without an actual purchase?
    Hi, I think there is nothing wrong with your approach, but when making the actual payment, you need to manually transfer the amount from the advance payment account.
    In addition, there is no method to associate prepayments with credit limits in BC standard functions, so if necessary, it may need to be customized.
     
    Hope this helps.
    Thanks.
    ZHU
     
  • Suggested answer
    Valentin Castravet Profile Picture
    Valentin Castravet 26,795 Super User 2025 Season 1 on at
    How to post an advance payment//prepayment or purchase credit memo without an actual purchase?
    Create a payment journal entry that's not applied to anything. You're simply crediting the bank account and debiting the vendor. Afterwards, when purchase invoices are posted, you can apply the payment to the invoice. I'm not sure why you're looking at credit memos?
     

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