Prepayment of Invoice

Presented by: Chirag

Thakkar

 Basic of Prepayment Invoice

Prepayment Invoice Application
Default Prepayment Account
Accounting of Prepayment
Worth Taking Points on Prepayment
Prepayment Status Report
Prepayment Invoice Restriction
Summary

Basic of Prepayment Invoice [White Paper (Doc ID

134123.1)]
Meaning A prepayment is a type of invoice you enter to make an advance payment to a supplier
or employee.
Type of Prepayment
1. Temporary prepayments can be applied to invoices or expense reports.
2. Permanent prepayments cannot be applied to invoices.
. Conversion Of Prepayment Invoice Type
o. If user has entered the prepayment as a Permanent type and want to apply it, user can query the prepayment in the
Invoices window and change the Prepayment Type to Temporary.
o. However user has entered Temporary prepayment which is being adjusted in such case it is not possible for user to
convert the same in to Permanent prepayment.

Prepayment Invoice Application

Application of Prepayment on Standard Invoice can be done by 2 ways
1. Directly From Prepayment invoice window here user has to select the invoice against
which user wants to apply prepayment.

Here there is
only single
check box .

 Prepayment Invoice Application

2. From Invoice window , here user has to select the prepayment invoice against which user
wants to adjust the same.

Basic difference between both the above mention is that when supplier is giving user an invoice
which is net of the Prepayment invoice amount in such case user should use 2 nd method by click
on both the check box so Oracle directly convert that invoice as net off Prepayment invoice.
In above case user has to enter only net off amount at the header level .

Here there is
two check
boxes are
available .

Prepayment Invoice Application

Application of Prepayment on Expense Report
You have to create a regular Prepayment Invoice using Invoice Workbench Window & pay it in
full taking Employees name as a Supplier.
Then, as soon as you enter Employee Name in the Expense Report Window, system will
indicate the Prepayments available.

Prepayment Invoice Application

You have to apply the Prepayment to the Expense Report before exporting it to Invoice
Workbench.
After applying Prepayment to the Expense Report, it looks like-

Prepayment Invoice Application

After saving the Expense Report rest steps will be the same as in case of processing Normal
Expense Report.
I.e. You will have to run a request - Expense Report Export for Payables Expense Report. And,
validate the Invoice using Invoice Workbench Actions Button.
The Invoice Workbench looks like-

Default Prepayment Account

User Define Prepayment Account at 2 stages
1. User specify Prepayment Account at Financial Option which will get default at Supplier Site

Default Prepayment Account

Once user assign Prepayment at Financial option the it will automatically defaults at Supplier Site
Level which can be inquire at Accounting Tab which will automatically be defaults at prepayment
invoice distribution level which can be change by user.

Accounting For Prepayment

Accounting Entry For Prepayment of Invoice

Accounting Entry For Payment of Prepayment Invoice

Accounting For Prepayment

Accounting Entry For Application of Prepayment to Invoice

Worth Taking Points on Prepayment

Settlement Date

Oracle provides an additional control by providing

Settlement Date concept .
Its a kind of temporary hold provided on Prepayment
invoice.
With the help of settlement date user can apply the
Prepayment to that invoice which is recorded on or after
the settlement date it self.

Prepayment Invoice
Payment
Prepayment Terms
Payment-Terms defaults from Invoice tab in

Payable Options.
However if there is nothing defined at Payable option in
such case then it will default the payment term for
prepayment invoice from Supplier Site.

Worth Taking Points on Prepayment

Prepayment Notification
When you enter an invoice for a supplier for whom you have outstanding Temporary
prepayments, Payables notifies you that you have prepayments available that you can
optionally apply.

Worth Taking Points on Prepayment

Prepayment & Discount Majorly the Prepayment is having immediate payment terms so there would not be any
question of discount on prepayment but when user is making balance amount of invoice in
specified discount period in such case system will calculate discount only on Net amount paid
after adjusting the prepayment.
E.g. User Had made prepayment of 500 which is 25% of total invoice , invoice having payment
terms as 10/10 , N30 now if user makes remaining payment of 1500 (i.e. balance 75% )
with in 10 days of term date in such case user will get Disc only of 150 (i.e.10% of 1500 and
not on 2000).

Worth Taking Points on Prepayment

Stop on Prepayment

When user made an payment of prepayment but instruction of stop is issued on the same
in such case status of Invoice also remains the same as Available which means user can
apply that prepayment invoice .(As a solution we can convert that in to Permanent
Prepayment or delay settlement date.)

Prepayment and Withholding Tax

You can apply only item distributions from the prepayment (i.e. NOT the tax on
prepayment if any).

Worth Taking Points on Prepayment

Multiple Lines In Prepayment
If user had entered multiple lines in Prepayment invoice in such , each line of prepayment
invoice is showing as a different prepayment which can help user to set off single line of
prepayment against their respective Invoice.

Worth Taking Points on Prepayment

Prepayment and Invoice having same Purchase order
Business Case

- User having 1 purchase Order of some specific class of item e.g.

Cement of 100 qty of 10 each (i.e. total 1000 Rs).User has to make Prepayment of
1000 Rs now user wants that when he makes Standard invoice for that particular PO in
such case he can only be able to apply that prepayment which he had made against
that particular PO.

Solution
1. User has to create one regular Purchase Order for that particular product.
2. User has to create one Prepayment Invoice by matching PO with Prepayment invoice .
3. In addition to above, user has to enter the PO number in Prepayment PO Number
tab at header level of Prepayment invoice.

Worth Taking Points on Prepayment

Prepayment and Invoice having same Purchase order
4. When the user will enter the standard invoice and match the same to the PO against
which prepayment is made, system will show a Hold after validation which reminds
the user to apply the PO matched prepayment .

5. In order to release the hold user needs to apply such prepayment to the invoice.
Once user applies the prepayment, Invoice hold on that standard invoice will
automatically be released by the system.

Worth Taking Points on Prepayment

Cancellation of Prepayment and Refund of the same
Prepayment can be cancelled by 3 ways
1.

Create a dummy standard invoice of amount of refund and then apply the
prepayment to the same and at invoice level in distribution instead of Expense A/c
enter the Cash/ Bank for the same.
(Doc ID 1599303.1)

2.

Create a dummy standard invoice of amount of refund and then apply the
prepayment to the same , also create the Debit memo and apply the same to the
and claim the refund of that debit memo.
(Doc ID 1949298.1)

3.

Create dummy Mixed invoice of amount of refund but at line level user has to enter
Nil amount , now apply that prepayment by enabling both the check box and then
take the refund of that mixed invoice.

4.

Cancel the payment made for prepayment and then cancel the Prepayment invoice.

Prepayment Status Report

You can use the Prepayments Status Report to review the unapplied prepayments
and unpaid or partially paid invoices for a supplier. You can compare the invoices
and prepayments for a supplier to determine if there are outstanding
prepayments which you can apply against unpaid invoices.

Prepayment Restriction
Prepayment must be fully paid before user can apply to any invoice.
Prepayment can be done only after getting it is being approved.
User can only apply a prepayment to an invoice with the same supplier, invoice currency, and
payment currency as the prepayment.
User cannot take discount on prepayment.