Are you ready to embark on the second and final leg of our journey – creating the prepayment invoice transactions? If you haven’t completed the setup, see my blog Prepayment Invoice journey: Part I Setup.

On to the processing!

I will be using the SEED folder with Company NA10 and its Site NA012. My customer will be NA001.

• Created a sale order (GESSOH) on Company NA10, Site NA012 for Sold-to NA001: (SONNA0120083)
  • Note that the Prepayments option in the right Option box is grayed out. It is not an option for Company NA10 because the company’s PREFUN parameter was set to “Prepayment invoices” for NA10. The option will still be available for companies where the parameter was set to “Prepayment.”

• The Payment term (GESTPT) must have a Payment type of Open Item. I have used CH30NET.

• The sales order has one line with Order qty of 100 @ Gross price of $11/UN for $1,100.

• Create the prepayment invoices in A/P-A/R accounting, Invoicing, Prepayment management (GESPREPI).
  • Contract date = 04/28/23
  • Site = NA012 (NA012 is under company NA10)
  • Source = Sales order (Is only available if the PREFUN parameter is set to Prepayment invoices)
  • Customer / Supplier code = NA001

• Once you tab off the Customer field, open the Order selection drawer and select the sales order previously created. Only 1 sales order line can be selected per Prepayment Contract.
• In the Prepayment invoices grid, enter an Invoice date for the prepayment, Prepayment percentage (must be less than 100%), and G/L Account
• Until the transaction is saved, the Prepayment invoice button will be grayed out.
• Click Prepayment invoice.

• The prepayment invoice is created and the Invoice no (DIR000029) is in the Prepayment Invoices

• We will post the prepayment invoice in A/P-A/R accounting, Invoicing, Customer BP invoices
• Select the prepayment invoice from the left list.
  • Note that the Source Document is the Prepayment invoice contract.
• Click Post

• The Journal entry debits Account receivable and credits the account entered in the Prepayment invoice grid.
  • The Debit is from Auto journal BPCIN Line 1 and the credit from BPCIN Line 2.

• Time to record the receipt of payment for the prepayment invoice.
  • In A/P-A/R accounting A/P-A/R accounting, Payments, Check Receipts, create a cash receipt for the prepayment amount selecting the prepayment invoice from the left list.
  • Post
  • The Journal entry will credit AR from PRINC auto journal Line 1 and credit cash from PRINC line 18.

• In Sales order, click Delivery after calling up the original Order to move to Sales, Deliveries, Delivery.
• Assuming that the complete order was delivered, click Validation on the Delivery.
• Click Invoice on the validated Delivery to move to the Sales, Invoices, Sales Invoice
• Review and Post the invoice.
  • Note that the Invoice is for the full amount of the Sales Order.

• If you click Open Items, you will see that the prepayment amount is listed in the Payment field

• Here is journal when the invoice INV000018 is posted.

• Another journal (PPIN/NA012/23040004) is generated which reversed the prepayment invoice. It credits AR (SHIRE Line 10) and debits (SIHRE Line 20) the account entered in the prepayment grid which in our example is 41100.

• Back to A/P-A/R accounting A/P-A/R accounting, Payments, Check Receipts (GESPAY).
  • Click New icon
  • Site = NA012
  • BP= NA001
  • Entry = INV000018
  • The invoice balance is now $880 which is the Total amount of $1,100 less the 20% prepayment of $220

•  The journal credits AR (PRINC Line 10) and debits cash (PRINC Line 18)

• Let’s go back to the Sales order. The Prepayment contract no is listed along with the Prepayment status of Paid.

• The Prepayment invoice management screen’s Final invoices grid lists the Final invoice no. (INV000018) and the Reversal journal no. (PPIN/NA012/23040004)

• Below is a Table which shows the auto journals and line numbers used during the prepayment invoice process. The negative line numbers indicate a credit. After all the postings, we are left with a $1,100 debit to cash (AC 10100) and a $1,100 credit to revenue (AC 41100). The AR (12100), Shipped not invoice (12400) and Sales revenue clearing (12400) accounts. zeros out  .

Take a look at Prepayment Invoices (GESPREPI) common questions for issues that may pop up,

Hope this helps you have a smooth journey through prepayment invoice setup and processing,

Take care my X3 friends. Stay safe!