Prepayments

A prepayment is a payment you make to suppliers in anticipation of their provision of goods or services. In Oracle Fusion Payables, a prepayment is a type of invoice that you can apply to an outstanding invoice to reduce the invoice amount.

You must fully pay a prepayment before you can apply it.

On the Manage Invoice Options page, you can set prepayment options, such as whether to show available prepayments during invoice entry.

Creating a Prepayment

To create a prepayment, specify an invoice type of Prepayment.

The Allow prepayment application option indicates that the prepayment is available for application and classifies the prepayment as temporary. An example of a temporary prepayment is a catering deposit to a hotel. When the invoice from the hotel arrives, you can apply the prepayment to the invoice to reduce the invoice amount due.

If you disable the Allow prepayment application option, you can't apply the prepayment and the prepayment is classified as permanent. An example of a permanent prepayment is a lease deposit for which you don't expect to receive an invoice.

Applying a Prepayment

When you apply a prepayment, the invoice is updated to reflect the amount paid and the prepayment amount available for application is reduced. A prepayment application line with corresponding distributions is added to the invoice.

Applied prepayments can be either inclusive or exclusive. A supplier might send you an invoice that references a prepayment. If the supplier reduces the invoice amount by the prepayment and associated tax, the prepayment is inclusive. You can designate a prepayment as inclusive by selecting the Included on Invoice option when applying the prepayment. When you apply an exclusive prepayment to an invoice, the unpaid invoice amount is reduced by the amount of the prepayment application.

If a prepayment is matched to a purchase order, purchase order quantities are updated during prepayment application.

You can also pay a prepayment in a currency that's different from the invoice currency. If you choose to do so, you must ensure that both the invoice and the prepayment have the same invoice currency. For example, consider the following payables documents.

• Invoice: Invoice currency is USD, payment currency is CAD

• Prepayment: Invoice currency is USD, payment currency is RUB

You can apply the prepayment to this invoice because both payables documents have an invoice currency of USD.

Unapplying a Prepayment

If a prepayment is mistakenly applied to an invoice, you can unapply the prepayment. The prepayment is then available for application to another invoice.