PREPAYMENT RESTRICTIONS:
ONE ITEM DISTRIBUTION: You can enter only one Item type distribution for each prepayment.
ONE TAX DISTRIBUTION: You can enter only one Tax type distribution for each prepayment.
ONE SCHEDULED PAYMENT: You can have only one scheduled payment for each prepayment.
NO DISCOUNTS: You cannot take discounts on prepayments.
SAME SUPPLIER AND CURRENCY: You can only apply a prepayment to an invoice with the same supplier, invoice currency, and payment currency as the prepayment.
PURCHASE ORDER MATCHED INVOICES: If the prepayment is associated with a purchase order, you can only apply it to invoices matched to that purchase order.
CANNOT WITHHOLD TAX. You cannot withhold tax on prepayments.
Recording a Refund of a Prepayment or Advance
You can record a refund from a supplier that pays back an unused prepayment or part of a prepayment. When you do this, Payables reverses the prepayment so that it is no longer outstanding and so that you can no longer apply the prepayment to an invoice. The net effect is a debit to your cash (asset) account in the amount of the refund and a credit to the prepayment account in the amount of the refund.
You can use exactly the same method to record a refund from an employee for an advance.
Prerequisites
You have entered and paid a prepayment or advance.
The supplier or employee has refunded the unused portion of the prepayment.
If the supplier or employee has not refunded the entire prepayment, apply the appropriate amount of the prepayment to an invoice or expense report.
To record a prepayment refund:
1. In the Invoices window, enter an invoice in the amount of the refund from the supplier. Enter Standard for the type. Enter a description on the invoice to indicate that you are retiring a prepayment. Create an invoice distribution for the amount of the refund and debit your Cash account or an accounts receivable account. Credit the accounts payable liability account as always.
2. Choose the Actions button to navigate to the Invoice Actions window. Select the Apply/Unapply Prepayment check box and choose OK.
Select the prepayment to which you want to apply the refund. Enter the refund amount in the Amount To Apply field. Optionally change the GL Date, which is the accounting date for the reversing prepayment distributions that Payables creates when you apply a prepayment. If you want to see more information on a prepayment, select it and choose the Invoice Overview button.
If you want to approve the new prepayment distributions that the application will create and the Allow Online Approval Payables option is enabled, select Approve. If the Allow Online Approval Payables option is not enabled, you can submit Payables Approval from the Submit Request window.
If you want to print a Prepayment Remittance Advice for the supplier, select Print.
3. Choose the Apply/Unapply button to apply the prepayment amount to the invoice you entered for the refund and to save your work.
This fully retires the prepayment and reduces the amount remaining on the invoice to 0. Payables automatically enters a reversing distribution on the prepayment to credit the prepayment account. This credit balances the debit you entered on the invoice (Step 1) to the Cash account.
