Supplier Prepayments in Microsoft Dynamics AX 2012
Posted on: November 19, 2015 | By: Jarrod Kraemer | Microsoft Dynamics AX/365
Occasionally when you order parts or service from a vendor, the vendor requires you to prepay a certain amount, either a percentage of the total purchase order amount or a fixed amount. Luckily, Microsoft Dynamics AX makes it easy for your organization to apply prepayments to purchase orders in just a few simple steps. Before we go through the process of entering a prepayment against a purchase order, it is essential that we have the required setup on the item group for prepayments. For the item or service that you are purchasing, make sure that in the item’s item group, under Purchase Order, an appropriate account is entered in the Prepayment field. If an account is not filled in for Prepayment you will receive an error when trying to post the prepayment invoice.
Now, let’s look at the process for entering purchase order prepayments:
1) The first step in processing a prepayment is to create purchase order like normal for the part or service that you are ordering.
a. Procurement and Sourcing > All Purchase Orders > New Purchase Order
b. Choose vendor/item/quantity to purchase
2) Enter an amount that needs to be prepaid for the purchase order.
a. Select purchase tab and click Prepay>Prepayment button
b. Enter a description for the prepayment
c. Enter an amount to prepay – this can either be a fixed amount or a percentage of the total amount of the purchase order (use if the vendor, for example, requests a 10% prepayment on orders)
d. Enter a procurement category for the prepayment – this will be the procurement category that the prepayment will be tracked against
e. Save the prepayment details
f. Confirm the purchase order
*Note: you can remove a prepayment on an order after it has been setup – by clicking Prepay>Remove Prepayment
3) Post the prepayment invoice once it arrives from the vendor
a. Open the purchase order you created in steps 1 and 2
b. Go to Invoice tab > Generate > click on Prepayment Invoice
c. Enter the invoice number and any other required information (ex. invoice date)
d. Click Post to post the invoice
4) AP Processes the prepayment against the invoice the we created in step 3
a. Accounts Payable > Journals > Payment Journals
b. Choose vendor that we entered the prepayment invoice for
c. Click Settlement > select the invoice that we just entered
d. Generate payment and post the payment to the vendor
*Note: in Microsoft Dynamics AX 2012 R2/R3 you may settle multiple prepayment invoices with one payment journal. In Microsoft Dynamics AX 2012 R1, you will receive an error if you try to post payment for multiple prepayment invoices, or if you do not settle prepayments in the order they were entered into the system (by date). There is a hotfix available to resolve this issue in R1.
5) Apply prepayment and post the purchase order invoice for the remaining amount, once received from the vendor
a. Open purchase order
b. Go to Invoice tab > Generate > click on Invoice
c. In the invoice form click on Actions > Apply Prepayment
d. Select the prepayment that we paid for this PO
e. Click Apply Prepayment button
f. A line for the prepayment is added to the invoice subtracting the prepayment amount from the invoice total
g. Enter invoice number and any other necessary information, Post the invoice
You will now always be able to see this prepayment linked to the invoice for this purchase, it is very helpful to have full visibility into purchase orders and the prepayments made against them.
For additional information please feel free to reach out to us at firstname.lastname@example.org or (312) 345-8817.
All the best!
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