There are times when you need to send out a deposit on a purchase order before the vendor will ship out the product or provide services. How do you do this in NetSuite when you haven’t received a bill yet? Do you write a check and credit cash and debit AP? I’ll show you how to keep track of the payments so that you can apply them to the vendor bill later.
NetSuite’s Vendor Prepayment feature enables you to record and track multiple prepayments and prepayment applications for your vendors. It is a posting transaction that impacts the general ledger without offsetting the AP account. When the prepayment is applied then the offset to AP occurs. To enable this feature, go to Enable Features/Accounting/Advanced Features and check the box for Vendor Prepayments. You will also need to configure a vendor prepayment account – this can be a new G/L account or an existing account as long as it is an Other Current Asset type. To set this up go to Accounting Preferences/Accounts Payable section and select an account from the Vendor Prepayment drop down list.
You can associate your prepayment with a purchase order, and you can do this in two ways. You can enter it from the Payables/Enter Vendor Prepayments, or you can enter it from the Purchase Order and click the “Enter Prepayment” button as shown below.
This will bring you to the Vendor Prepayment page (shown below) and will associate it with the PO. This prepayment can be automatically applied to the vendor bills associated with the PO using the Auto Apply Preference. There can be multiple prepayments on the purchase order as well.
The prepayment will then show on the related records tab on the Purchase Order.
When you bill the PO, the prepayments are applied against the vendor bills. If there are multiple bills NetSuite will apply the payment against the oldest bill first, applying the maximum possible prepayment on each application. If you do not have Auto Apply enabled, you must manually apply the prepayment against the vendor bills.
As you can see in the above example the vendor bill is for $5,550.00 and the Vendor Prepayment Application is for $1,000.00. The vendor prepayment application decreases the amount owed to the vendor.
If you have a standalone Vendor Prepayment (shown above) you can still apply the prepayment to any bill from the same vendor.
The process for Vendor Prepayments associated to a PO is a recent change for NetSuite and has simplified the procedure for keeping track of the payments so that they can be applied to the vendor bill later.
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