Vendor Prepayment Functionality in Microsoft Dynamics AX 2012

Vendor Prepayment Functionality in Microsoft Dynamics AX 2012

Prepayments are a common business practice, with organizations issuing 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.

New prepayment functionality is available in Microsoft Dynamics AX 2012, making it easier for organizations to complete, manage and track prepayments to vendors. There are five steps involved with processing a prepayment for a purchase order, which include the following:

1.    Create the purchase order.

2.    Set up the prepayment.

3.    Post the prepayment.

4.    Make a payment.

5.    Settle the payment against the final invoice.

Create the Purchase Order

The first step toward simplifying the prepayment process is by creating a purchase order.

Set up the prepayment

After a purchase order is created, you must then set up the prepayment that will be associated with it. To do that, click on the Purchase tab in the top ribbon, and then click Prepayment.

After clicking Prepayment, a window will pop up, asking for you to enter details regarding the prepayment. In the Description field, enter the description of the prepayment that you’re creating, and then click the prepayment basis that you wish to apply.

With the prepayment basis, you have two options: Fixed or Percent. With the fixed option, you can apply a fixed dollar amount that you wish to apply to the purchase order amount. In Figure 3, we have entered a fixed amount with the value of $100,000 – so if we choose this prepayment option, $100,000 will be applied to the purchase amount.

With the percent option, you can choose to apply a certain percentage of the purchase order amount. In Figure 4, we have entered 10% as the percent value, so 10% of the purchase order will be applied as prepayment. As you can see, the system calculates the 10%, showing the prepayment as $14,620, which is of course 10% of the total $146,200 purchase order amount.

For the purposes of this demonstration, we’ll keep the prepayment as 10% of the purchase order amount. After you define your prepayment values, enter a Prepayment Category ID from the dropdown, and then click Save.

If after creating a prepayment you decide you don’t want to apply it to the purchase order, you can remove it by simply selecting the Remove Prepayment option in the top ribbon.

After you have configured the prepayment you wish to apply to the purchase order, confirm the order by clicking the Confirm option.

Post the prepayment

After you set up the prepayment basis toward a particular purchase order, you can then post the prepayment. To do that, go to the Purchase Order header, then to the Invoice option, and click Prepayment Invoice.

After clicking the Prepayment Invoice, enter the invoice description and post the prepayment invoice.

Once the prepayment invoice is posted, check to make sure that the vendor transaction and vendor balance reflect the prepayment invoice transaction.

Make a payment

After creating the prepayment and posting the prepayment invoice, it’s now time to make a payment. To do so, first create a Payment Journal, mark the prepayment amount, and then post the journal.

At this stage, it is important to also check the vendor transactions and vendor balance (to ensure that everything continues to match up correctly).

Settle the payment against the final invoice

The final step of the prepayment process is to settle the payment against the final invoice. To accomplish this, first go to Purchase Order and Receive the Products, and then go to the Invoice section and click Invoice. When you’re on the opened form, click Apply Prepayment.

After clicking Apply Prepayment, a screen will open to show the prepayment amount that can be applied to the Invoice Amount (of the purchase order). The “Available application amount” field indicates the prepayment amount.

Then select the prepayment to be applied (or if you've set up multiple prepayments, you can select those as well), and then click Apply Prepayment.

After applying the prepayment, enter the invoice description and post the invoice.

After the prepayment has been applied and posted, check the open transaction that still needs to be paid to the vendor, and confirm the amount. In our case, since we applied a prepayment that is 10% of our $146,200 purchase order (which equals $14,620), we see that we still owe $131,580 on the purchase order after our prepayment ($146,200 – $14,620 = $131,580).

Source Information:

http://blog.ignify.com/2012/07/18/vendor-prepayment-functionality-in-microsoft-dynamics-ax-2012/