Prepayments for Accounts Payable in Microsoft Dynamics NAV: Part II

Last time we discussed how to setup the Vendor for Prepayments. If you missed it, check it out Part I – Accounts Payable. Now let’s move on to processing a Purchase Order and the payment to the Vendor.

The Prepayment % set on the Vendor card will default into the Prepayment tab on the Purchase Order. If the purchase is subject to tax, you can select the Prepmt. Include Tax to added the prorated tax amount to the line for the prepayment invoice and credit memo. Additionally, the percentages set on the specific items will populate as the items are added.

To verify the amount that will post with this prepayment invoice, go to the Posting section of the Actions ribbon. Select Prepayment \ Prepayment Test Report.

Here, the prepayment test report shows each line and the amount of the corresponding prepayment that will be invoiced.

The Prepayment invoice must be done from the Purchase Order, not through the Purchase Invoices. To post, you will need to update the Posting Date, Document Date, and the Vendor Invoice No. Then, navigate back to the Posting Tab on the Actions ribbon and select Prepayment \ Post Prepayment Invoice.

Once the invoice has been posted, you can navigate to view it. The status of the Purchase Order will also change from Open to Pending Prepayment.

By navigating to the G/L posting details, we can verify that the invoice posted to Accounts Payable (22400) and Vendor Prepayments (13510).

At this point, if a receipt against this Purchase Order is attempted an error warning will pop up. It’s important to note that if receipts occur directly on the Purchase Order, the Pending Prepayment status will NOT prevent the receipt / invoice posting.

If warehousing is being used, the Purchase Order cannot be received against until the Prepayment has been completed and the order changed to the Released status.

To update the status of the Purchase Order, the Prepayment Invoice must be paid. Using the Payment Journal, process the Vendor payment (either as a single payment or along with your normal payment process).

The payment will relieve Accounts Payable (22400) and the appropriate Bank / Cash account (in this case 22100), but will leave the balance in the Prepayment Account (13510).

The status of the Purchase Orders will not automatically update to Released and must manually be updated in versions prior to Business Central.

In the next installment of the Prepayments series, we’ll close the loop by processing the final invoices to clear out the Prepayment (deposit account).