Processing Accounts Payable Using Advance Payment Methods

Occasionally, it may be necessary or desirable to provide a known and reputable Vendor with an advance payment for goods and/or services before delivery. If so, a payment on account, which is an entry of a manual check to the Vendor, can be used. In this case, the amount on the check is credited to the Vendor selected during the check process. This process does not make use of the Vendor invoicing process in DEACOM and does not support the tracking of pre-payments to a Vendor against specific Purchase Orders, since no Purchase Orders are referenced in the process. However, users can mark a posted pre-payment for settlement, at a later time, against Purchase Orders for this Vendor.

A retainer can be a single advance payment or a recurring (e.g. monthly) payment. Its distinguishing feature is that the employer pays in advance for work to be specified later.

Pre-payments may be entered via the Accounting > Manual Checks transaction by selecting the "Pre-payments" Report type on the pre-filter, allowing the user to create a Purchase Order with a "Payment on Account" type, and printing a check for that Vendor. Reference the entering pre-payments via Purchasing Order Entry section before entering pre-payments via Manual Checks in order to understand all options.

Configuration

Refer to the Processing Accounts Payable landing page for Configuration information.

Notes:

  1. The security option "Accounting -- A/P Payment" will remove the "Payment on Account" option in the "Report Type" field on the "Manual Check" form if the user does not have sufficient permissions.
  2. Beginning in version 17.04.008, the PO Pre-Payments and PO Pre-Payment reports have been added to Accounting > Accounting Reporting for better visibility on purchasing pre-payments.

Process

Entering a Payment on Account

  1. Navigate to Accounting > Manual Checks.
  2. Select the Report Type of "Payment on Account" and select the appropriate Vendor.
  3. Ensure the following are entered and accurate on the pre-filter:
    1. Payment Date
    2. Cash Account
    3. Charge to Account
    4. Facility
    5. Payment Currency
    6. Payment Type
    7. Amount (must be greater than 0)
  4. Click the "Apply" button, which will display the "Process Checks" form.
  5. Ensure the appropriate "Reference", "Date Paid", "Payment Type", and "Cash Account" are entered. Leave the rest of the form as defaulted, including the "Paper Output" flag.
  6. Click "Continue" to print the check.
  7. The system will display the reference Purchase Order (used to track the payment to the Vendor) that was created for the Payment on Account. This Purchase Order will be marked as received and invoiced immediately upon creation.

When creating checks for regular payments against Purchase Orders in the future, the amount entered for Payment on Account will be displayed as a credit on the Outstanding Orders form. Also, if there are required User Fields, the User Fields form will be displayed allowing the user to enter the necessary information.

Entering retainer checks

  1. When creating a new Purchase Order and adding a line:
    1. Enter the Quantity as 1.
    2. Enter the price as $0.01.
    3. Check off the "Invoice/Pre-pay" flag.
    4. Check the rest of the information and save as normal, which will open the Enter Invoice Received form.
  2. On the Enter Invoice Received form, check off the "Pre-Payment" flag then click "Apply", which will open the Process Checks form.
  3. Exit out of the Process Checks form without printing, which will revert the user back to the Purchase Order Entry form. Take note of the Purchase Order number then exit the form.
  4. Navigate to Accounting > Manual Checks.
  5. Select a Report Type of "Pre-Payments", select the Vendor, then click "View".
  6. Locate the Purchase Order created in step 1 and click "Move" to get it on the right-hand side of the form.
  7. Click "Modify Amount", enter the amount of the retainer in the "Set Total Amount" field, then click outside the field to enable the "Save" button.
  8. Click "Save" and "Exit" on the Payment Deductions form.
  9. On the Manual Checks form, click "Apply", which will open the Process Checks form.
  10. Confirm everything on the Process Checks form is correct. Change anything as needed then click "Continue", which will print the check.
  11. Confirm that the checks printed correctly. This amount will now be sitting on the Vendor’s account and invoices can be applied against it.

Entering Pre-payments via Purchasing Order Entry

Pre-paying partial amount - Fulfilling later

  1. Navigate to Purchasing > Order Entry and enter the Purchase Order as normal. For more information, refer to the Entering Purchase Orders Best Practice page.
  2. Prior to saving the Purchase Order, check off the "Invoice/Pre-pay" box on the General 1 tab. Click "Save".
  3. Upon saving, the system will display the Enter Invoice Received form.
  4. Check the "Pre-payment" box on this form and enter an amount less than the "Invoice amount" in the "Net to pay" field.
  5. Fill in the other fields on the form as required then click the "Apply" button.
  6. The system will present the Process Checks form with the amount previously entered.
  7. Ensure all required fields, marked in blue, are populated and then click the "Continue" button to print the check and complete the process.

Note: When viewing (not modifying) the Purchase Order, the "Balance Due" amount will reflect the pre-payment and the "Received", "Invoiced", and "Paid" dates will be empty, indicating that this order still needs to go thru the receipt, invoice, and payment steps in the system. Also, when creating a backorder for a Purchase Order that has been pre-paid, the system will apply any pre-payment overpayment to the backorder at the creation of the backorder. Specifically, when partially receiving a Purchase Order that has been pre-paid and the payment is larger than the remaining total due, the balance of the payment is applied to the backorder.

Pre-paying full amount - Fulfilling later

  1. Navigate to Purchasing > Order Entry and enter the Purchase Order as normal. For more information, refer to the Entering Purchase Orders Best Practice page.
  2. Prior to saving the Purchase Order, check off the "Invoice/Pre-pay" box on the General 1 tab. Click "Save".
  3. Upon saving, the system will display the Enter Invoice Received form.
  4. Check the "Pre-payment" box on this form and ensure the full amount is entered in the "Net to pay" field.
  5. Fill in the other fields on the form as required then click the "Apply" button.
  6. The system will present the Process Checks form with the full amount.
  7. Ensure all required fields, marked in blue, are populated and then click the "Continue" button to print the check and complete the process.

Note: When viewing (not modifying) the Purchase Order, the "Balance Due" amount will reflect the pre-payment and the "Received", "Invoiced", and "Paid" dates will be empty, indicating that this order still needs to go thru the receipt, invoice, and payment steps in the system.

Pre-paying full amount - Fulfilling now

In this case, the "Pre-payment" checkbox on the Enter Invoice Received form (Step 3 in this and the two former scenarios) is not checked, and the system immediately receives, invoices, and marks the order as paid. It is important to note that this option does not represent a payment in advance prior to the delivery of goods or services and therefore falls outside the scenarios covered above. This option typically represents a situation where the Vendor delivers the goods or services immediately and is paid in full by entering a Purchase Order which will be marked as received, invoiced, and paid on the spot, similar to a Point of Sale situation.

  1. Navigate to Purchasing > Order Entry and enter the Purchase Order as normal. For more information, refer to the Entering Purchase Orders Best Practice page.
  2. Prior to saving the Purchase Order, check off the "Invoice/Pre-pay" check box on the General 1 tab. Click "Save".
  3. Upon saving, the system will display the Enter Invoice Received form.
  4. Do Not Check the "Pre-payment" box on this form, do ensure the full amount is entered into the "Net to pay" field.
  5. Fill in the other fields on the form as required, ensure the "Print Checks Now" flag is checked, then click the "Apply" button.
  6. The system will present the Process Checks form with the full amount.
  7. Ensure all required fields, marked in blue, are populated and then click the "Continue" button to print the check and complete the process.

Note: When viewing (not modifying) the Purchase Order, the "Received", "Invoiced", and "Paid" dates will be populated with the same date the pre-payment is entered. No further processing is required.

Entering pre-payments via Manual Checks

Pre-paying full amount

  1. Navigate to Accounting > Manual Checks and set the Report type to "Prepayment".
  2. Enter the filter as desired then click "View".
  3. Highlight the invoice to pay and click the "Move" button. Continue this process until all the invoices to be paid are on the right side then click "Apply".
  4. Confirm the check number matches the number on the check.
  5. Enter the payment type and confirm the cash account is correct, then click "Continue".
  6. Confirm that the checks printed correctly.

Pre-paying partial amount

  1. Navigate to Accounting > Manual Checks and set the Report type to "Prepayment".
  2. Enter the filter as desired then click "View".
  3. Highlight the invoice to pay and click the "Move" button. Continue this process until all the invoices to be paid are on the right side.
  4. Highlight the desired invoice and click "Modify".
  5. Enter the amount of the payment in the "Set Total Amount" field then click "Save" and "Exit".
  6. Click "Apply" and confirm the check number matches the number on the check.
  7. Enter the payment type and confirm the cash account is correct, then click "Continue".
  8. Confirm that the checks printed correctly.