How to create Prepayment Invoice in Oracle Cloud ERP

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 Dr2000 
 Liability Account  Cr 2000
Prepayent PaymentLiability Account  Dr2000 
 Cash /Cash Clearing  Cr 2000
Standard  invoice CreationItem Expenses Accout Dr3000 
 Liability  Cr 3000
Prepayment Application  Item Expenses Account  Dr3000 
 Liability   1000
 Prepayment    2000
Outstanding Invoice payment Liability  Dr1000 
 Cash /Cash Clearing  Cr 1000

The end to end process for prepayment and application of prepayment is explained in the below Video link

Please check this video

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