Prepayment in other words called Paying in Advance. In Oracle Cloud ERP why we make advance payment to supplier it is called Prepayment .Let us discuss how to create Prepayment Invoice in Oracle Cloud ERP and accounts payable module. Oracle Fusion Accounts payable offering has provided complete functionality to record supplier advance with prepayment Invoice .Also once supplier send the original Invoice ,we can apply the prepayment to the standard Invoice
We will see the complete flow of accounting entries generates in Oracle fusion for prepayment and its application.
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Steps to Create Prepayment Invoice in Oracle Cloud ERP
Create Prepayment .
Validate the Prepayment
Create Accounting for the Prepayment Invoice
Make Full payment for Prepayment Invoice
Create Accounting for the Prepayment Payment
Now create a standard Invoice for the same supplier and site
Validate the Standard Invoice
Create Accounting for the Standard Invoice and check accounting entry
Now apply the available Prepayment to the standard Invoice
Now submit create accounting again for prepayment application and check accounting entry
If any outstanding amount left ,pay this with normal check payment or EFT Payment.
Create Accounting and check accounting entry
To watch the complete video on Prepayment click here
How the Status changes in Oracle Cloud ERP
Notice here how the prepayment Invoice and standard Invoice status changes after each step
| Create Prepayment | ||
| After Prepament created | status | Never Validated |
| After validation | status | Unpaid |
| After payment | status | Available |
| After Application | status | Fully Applied |
| Standard Invoice | ||
| Create Invoice | status | Need validation |
| After validation | status | Validated |
| Apply Prepayment Application | status | Need revalidation |
Accounting entries in Oracle Cloud ERP for Prepayment
| Accounitng flow | |||||
| Prepayment creation | Prepayment Account Dr | Dr | 2000 | ||
| Liability Account | Cr | 2000 | |||
| Prepayent Payment | Liability Account | Dr | 2000 | ||
| Cash /Cash Clearing | Cr | 2000 | |||
| Standard invoice Creation | Item Expenses Accout | Dr | 3000 | ||
| Liability | Cr | 3000 | |||
| Prepayment Application | Item Expenses Account | Dr | 3000 | ||
| Liability | 1000 | ||||
| Prepayment | 2000 | ||||
| Outstanding Invoice payment | Liability | Dr | 1000 | ||
| Cash /Cash Clearing | Cr | 1000 | |||
The end to end process for prepayment and application of prepayment is explained in the below Video link
