Accounts Payable, Purchase Order, ERP Software Solution

Posted by Gerry Poe


erp tricks and tips
Question:
Without receiving purchase orders and creating receivers to match, what is the best way to record "prepayments" for purchase orders to suppliers?

Customers would like to pay an invoice now for product that will not leave from their supplier for a while.  They don’t want any purchase order items to show up in inventory, or create a payable. Yet they must record the pre-payment which will be “wired” from their bank to the supplier. 

Initial thoughts:

  • Post an invoice for the exact amount
  • Pay the invoice without a receiver match and issue the wire payment
  • When the inventory arrives in a few months receive the purchase order
  • Input a new invoice for the amount
  • Generate a credit/debit from the manufacturer in Accounts Payable
  • Post the credit/debit as payment on the invoice

Or issue a “credit/debit” from the supplier, actually the payment, and apply it to the invoice posted at the time of the future receipt of the purchase order.

Solution:  From the AP perspective, it is best to make a payment and let it stand as an unapplied debit/credit against the supplier.  It is called “reinstate” an invoice, allowing a payment to standalone as a “debit” (credit-note in AR terms) which can be applied to the receiver/invoice when product is received.  So, with this process, you are prepaying the order and will receive and apply the payment/debit to the invoice when product arrives?  All ledgering and accounting remains the same - no additional steps are required.

What other problems does this process solve?

  • Does not affect inventory
  • Does not require "remembering" what was done
  • Does not cause accounting errors or reversing journals
  • Allows business to flow unimpeded

For more help contact us today.

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SYSPRO was in the news which said they had recently received another award.  

SYSPRO Wins Golden Bridge Award for Software Innovation: SYSPRO Honored in Global Competition for SYSPRO STARS FastTrack Implementation Methodology

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Tags: ERP Software, Accounting, Accounts Payable, SYSPRO

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