Prepayment Overview

Down payments and prepayments are common practice worldwide. Most organizations, at one time or another, must pay for goods or services before an invoice is received. For example, when a company sets up a new customer account with a supplier, the supplier may require prepayment on the first one or two orders before extending credit to the buyer. The prepayment functionality in PeopleSoft Payables:

• Allows a payment to be made to a supplier without an invoice.

• Creates accounting entries for the prepayment.

• Applies VAT and withholdings to the prepayment.

• Facilitates the application of the final voucher to the prepayment.

Use prepayments to create payments for suppliers before receiving an invoice:

1. Enter and pay a prepaid voucher immediately.

2. Enter it as a regular voucher when the invoice is received.

3. Apply or link the regular voucher and prepaid voucher prior to payment of the regular voucher.

   The system deducts the payment made on the prepaid voucher from the regular voucher's scheduled payment and remits the balance to the supplier.

4. Post both the prepayment voucher and the prepayment to create the appropriate accounting entries once the prepayment has been made.

   The voucher and payment posting processes reverse the prepayment entries and charge the final accounts when the regular voucher is posted.

The prepayment voucher has all the attributes of a regular voucher, including document sequencing, VAT, and withholding. The actual prepayment has all the attributes of a regular payment with the exception of discounts and split payments.

Prepayment application can be performed in batch processing (part of voucher posting) or manually using the Apply Vouchers to Prepayment page. You can apply multiple vouchers to one prepayment, as well as one voucher to multiple prepayments.

The order in which you process prepayment application is flexible. You can enter and post a regular voucher before you enter the prepaid voucher. When you run voucher posting, the two transactions are applied (assuming they meet the application criteria). Or, you can manually apply the regular voucher to the prepaid voucher immediately after the prepaid voucher has been paid.