Overview of Prepayments in Receivables

Use Prepayments in Receivables to manage advance payments that you receive from your customers.

You may receive advance payments, for example: against expenses related to a project contract; full or partial payment against a sales order; a mandatory advance payment for goods and/or services to be delivered on a specified date.

In addition, in some countries the tax authorities require companies to issue a taxable prepayment invoice before or with any advance payment.

You use the AutoInvoiceImportTemplate and the Import AutoInvoice process to create prepayment invoices from advance payments from your customers and to apply the prepayment invoices to the final standard invoices.

You can't create, apply, or perform any other transaction activities on prepayment invoices using SOAP, REST API, or the Receivables Transaction pages ( including Create Transaction and Credit Transaction).

To use Prepayments in Receivables, you must complete these setups:

• Create Prepayment Receivables Activities
• Create Prepayment Transaction Types
• Create Prepayment Transaction Sources

All prepayment activity is against transactions in the ledger currency only. All prepayment accounting activity is maintained in a separate Prepayment account assigned to the Prepayment Receivables activity for a business unit. Prepayment accounting doesn't affect your Revenue account.

Create Prepayment Receivables Activities

Use the Manage Receivables Activities page to create a Prepayment Receivables activity for each business unit that will create and use prepayment invoices.

The Prepayment Receivables activity designates a separate general ledger account for all prepayment distributions. You can't create prepayment transactions unless a Prepayment Receivables activity is defined for the applicable business unit.

To create a Prepayment Receivables activity:

1. Navigate to the Manage Receivables Activities page.
2. Click the Plus (+) icon to open the Create Receivables Activity page.
3. In the Business Unit field, select the business unit you want.
4. In the Name and Description fields, enter a name and description that identifies this specific Prepayment Receivables activity.
5. In the Activity Type field, select Prepayment. This sets the GL Account Source field to Activity GL Account and read-only. The Activity GL Account value allocates expense or revenue to the Prepayment general ledger account that you enter in the Activity GL Account field.
6. In the Activity GL Account Source field, enter the account to use to create prepayment invoice distributions.
7. In the Tax Rate Code Source field, select None. This value allocates the entire tax amount to the prepayment distributions.
8. Save your work.
9. Repeat these steps for each business unit that will create and use prepayment invoices

Create Prepayment Transaction Types

Use the Manage Transaction Types page to create prepayment transaction types.

Create one or more prepayment transaction types with the Transaction Class of Invoice and the Transaction Subclass of Prepayment.

To create a prepayment transaction type:

1. Navigate to the Manage Transaction Types page.
2. Click the Plus (+) icon to open the Create Transaction Type page.
3. In the Transaction Type Set field, select a reference data set.
4. In the Name and Description fields, enter a name and description that identifies the transaction type as a prepayment transaction type.
5. In the Transaction Class field, select Invoice.
6. In the Transaction Subclass field, select Prepayment. This sets the Creation Sign field to Positive Sign. Prepayment invoices can't have a zero or negative transaction or line amount.
7. In the Transaction Status field, select Open.
8. In the From Date field, enter the date from which this transaction type is active.
9. Ensure that the Open Receivable, Post to GL, and Default tax classification code options are enabled.
   Note:
   When you select the subclass Prepayment, the Natural Application Only option is enabled and set to read-only. You can't use overapplications on prepayment invoices.
10. Complete the remaining fields according to your requirements.
11. Save your work.
12. Repeat these steps for each transaction type that you want to create for prepayment invoices.

Create Prepayment Transaction Sources

Use the Manage Transaction Sources page to create prepayment transaction sources.

Create one or more prepayment transaction sources to assign to the Import Receivables Transactions Using AutoInvoice process to both create prepayment invoices and apply prepayment invoices to transactions.

To create a prepayment transaction source:

1. Navigate to the Manage Transaction Sources page.
2. Click the Plus (+) icon to open the Create Transaction Source page.
3. In the Transaction Source Set field, select a reference data set.
4. In the Name and Description fields, enter a name and description that identifies the transaction source as a prepayment transaction source.
5. In the Type field, select Imported.
6. Ensure that the Action option is enabled.
7. In the From Date field, enter the date from which this transaction source is active.
8. Complete the transaction numbering and document numbering fields according to your requirements.
9. Complete the Receipt Handling for Credits field according to your requirements. If you leave the field blank, the Import AutoInvoice process creates all credit memos as Incomplete.
10. Don't enter a value in the Standard Transaction Type field. You can only select a Prepayment transaction type from the Import Receivables Transactions Using AutoInvoice process parameters.
11. In the Invalid Line field, select Reject Invoice.
12. In the Accounting Date in a Closed Period field, select Reject.
13. Complete the Import Information section according to your requirements.
14. Save your work.
15. Repeat these steps for each transaction source that you want to create for prepayment invoices.