About prepayments and prepayment journal vouchers
Important
This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.
Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012
Organizations might issue prepayments to vendors for goods or services before those goods or services are fulfilled. To minimize risk, you can track prepayments by defining the prepayment on a purchase order. Vendors can also create a prepayment invoice that is associated with a purchase order.
Organizations that do not want to track prepayments as closely can use prepayment journal vouchers instead of the prepayment feature. You can create prepayment journal vouchers by creating journal entries and marking them as prepayment journal vouchers. However, you cannot track which prepayments are made to a vendor against which purchase orders.
When to use prepayments or prepayment journal vouchers
Type of prepayment |
Modules |
Uses |
|---|---|---|
Prepayment |
Accounts payable |
You can do the following with prepayments:
|
Prepayment journal vouchers |
Accounts payable Accounts receivable |
You can do the following with prepayment journal vouchers:
|
Overview of the prepayment journal voucher process
Accounting practices in many countries/regions require that prepayments (payments in advance) from a customer or to a vendor are not posted to the usual summary accounts for the customer or vendor. Instead, these prepayments are posted to special ledger accounts for prepayments. When a sales order or purchase order is made, an invoice is issued to the customer or vendor. When the invoice is paid, the prepayment journal voucher and sales tax prepayment voucher on the prepayment ledger accounts are reversed, and the invoice amounts are automatically posted to the usual summary accounts. For more information, see Post prepayment journal vouchers to prepayment accounts.
Follow these steps to create a prepayment journal voucher:
Set up prepayment journal vouchers by using posting profiles for prepayment journal vouchers.
Create a journal voucher entry and mark it as a prepayment journal voucher.
Settle the prepayment.
After the vendor delivers the goods or services, the transaction for the prepayment journal voucher is automatically reversed.
Post the payment to the customer or vendor account.
Overview of the prepayment process
Prepayments are a common business practice, and are advance invoice payments that are made to a vendor before the purchase order is fulfilled. For example, a vendor might require a prepayment for specific goods or services. After the prepayment is paid, your legal entity can later apply the prepayment to one or more invoices from the vendor to offset the amount that was already paid.
Follow these steps to create a prepayment:
The purchasing agent creates, confirms, and then submits a purchase order that has a prepayment associated with it.
The vendor submits a prepayment invoice.
The accounts payable coordinator records the prepayment invoice against the purchase order, and then settles the payment.
After the vendor delivers the goods or services, and the related vendor invoices have been received, the accounts payable coordinator applies the prepayment amount that was already paid against the invoice.
The accounts payable coordinator pays and settles the remaining amount of the invoice.
For more information about the prepayment process, see Key tasks: Prepayments.