Finance: Prepayment Invoices for Sales Orders

In certain countries, when a company requests a prepayment for a sales order, they must record taxes on the received prepayment. To meet these requirements, in MYOB Acumatica, users can create prepayment invoices containing the same items as a particular sales order. The prepayment invoices include the taxes calculated based on the prepayment amount.

A user can create a prepayment invoice directly from the sales order; alternatively, if a prepayment invoice has been created manually, the user can link it to a sales order.

Processing of a Prepayment Invoice Created from a Sales Order

A user can create a prepayment invoice directly from a sales order, which causes the system to populate the prepayment invoice settings from the sales order.

When a sales order has been created and saved on the Sales Orders (SO301000) form, a user can create a prepayment invoice to request a full or partial prepayment for the sales order. On the Payments tab of the form, the user clicks the Create Prepayment Invoice button (see the following screenshot).

In the Create Prepayment Invoice dialog box, which opens, the Prepayment Percent (see Item 1 in the screenshot below) and Prepayment Amount (Item 2) boxes are populated depending on the state of the Prepayment Required check box in the customer's credit terms specified on the Credit Terms (CS206500) form:

• If the check box is cleared, the following values are specified:
  • Prepayment Percent: 100 for the first prepayment invoice created for the sales order; the percentage calculated proportionally to the specified prepayment amount for subsequent prepayment invoices
  • Prepayment Amount: The unpaid balance of the sales order for the first prepayment invoice created for the sales order; the unpaid balance of the sales order for subsequent prepayment invoices (if the prepayment percentage or prepayment amount was changed for the first prepayment invoice)

    A user can either keep these values unchanged (thus creating a prepayment invoice covering the order total) or specify a required prepayment percent or amount, which causes the other value to be calculated automatically.

• If the check box is selected and the prepayment percent is defined in the customer's credit terms, the following values are specified:
  • Prepayment Percent: The percent defined by the credit terms for the first prepayment invoice; the percentage calculated proportionally to the specified prepayment amount for subsequent prepayment invoices
  • Prepayment Amount: The amount calculated according to the prepayment percent for the first prepayment invoice; the unpaid balance of the sales order for subsequent prepayment invoices

    A user can either keep these values unchanged (thus creating a prepayment invoice covering the required prepayment amount) or change the prepayment percent or amount. If a user reduces the prepayment percent, an additional prepayment invoice or multiple invoices will be required.

Once the user has reviewed the prepayment percent and prepayment amount (and changed them if needed), they click Create. The system closes the dialog box and opens the prepayment invoice on the Invoices and Memos (AR301000) form with most of the settings copied from the sales order. The system assigns the reference number of the prepayment invoice based on the numbering sequence specified in the Prepayment Invoice Numbering Sequence box on the Accounts Receivable Preferences (AR101000) form.

A user can edit the settings of the prepayment invoice (excluding the Customer and Currency settings) before releasing the document.

For details of how to process prepayment invoices, see Finance: Prepayment Invoices in Accounts Receivable.

Payment of a Sales Order

If a prepayment invoice has been created for the total amount of a sales order and then paid in full, when a user creates a sales invoice for the sales order, the system automatically applies the prepayment invoice to the sales invoice. In the sales invoice, on the Applications tab of the Invoices and Memos (AR301000) form, the system adds a line with the prepayment invoice. Once a user releases the sales invoice, it is assigned the Closed status and the sales order is assigned the Completed status.

If a prepayment invoice has been created for part of an order's total amount and then paid, when a user creates a sales invoice for the sales order, the system automatically applies the prepayment invoice to the sales invoice on the Applications tab of the Invoices and Memos form. Once the sales invoice has been released, in the Balance box of the Summary area of the Invoices and Memos form, the system specifies the invoice balance, from which it has subtracted the amount paid by the prepayment invoice. The sales invoice remains open and a user will need to pay the amount that has not been covered by the prepayment invoice.

If a prepayment invoice has not been paid, the system does not apply it to the sales invoice automatically.

If a particular prepayment percent is required based on the settings of the customer's credit terms on the Credit Terms (CS206500) form, then the sales order retains the Awaiting Payment status until the full required prepayment amount is paid. Users can create multiple prepayment invoices or one prepayment invoice that covers 100% of the required prepayment amount. In the latter case, after the prepayment invoice has been paid, the sales order is assigned the Open status, and a user can prepare a sales invoice for the remaining amount of the order.

Linking of Prepayment Invoices to a Sales Order

In MYOB Acumatica, a user can create a prepayment invoice manually on the Invoices and Memos (AR301000) form and then link it to the applicable sales order.

A user links a released prepayment invoice—which has the Pending Payment status—to a sales order in either of the following ways:

• A user opens a sales order on the Sales Orders (SO301000) form. On the Payments tab, the user adds a line. In the line, they select Prepmt. Invoice in the Doc. Type column and the reference number of the prepayment invoice in the Reference Nbr. column. In the Applied to Order column, they specify the amount to be applied to the sales order. Once they save their changes, the system updates the values in the Total Paid and Unpaid Balance boxes on the Totals tab of the form.
• A user opens a prepayment invoice on the Payments and Applications (AR302000) form. On the Sales Orders tab, they add a line. In the Order Nbr. column of the added line, they specify the reference number of the customer’s sales order. In the Applied to Order column, they specify the amount to be applied to the sales order. Note that the amount cannot exceed the available balance of the prepayment invoice (the amount specified in the Available Balance box of the Summary area of the form) or the unpaid balance of the sales order (the amount specified in the Unpaid Balance box on the Totals tab of the Sales Orders form). In the Order Total column of the line, the order amount not covered by the prepayment invoice is shown. Once the prepayment invoice has been linked to the sales order, the system adds a line with the prepayment invoice to the sales order on the Payments tab of the Sales Orders form.

When the sales order with the linked prepayment invoice is billed—that is, a sales invoice is created for the sales order—the system automatically applies the fully paid prepayment invoice to the sales invoice by adding a line on the Applications tab of the Invoices and Memos (AR301000) form. On release of the sales invoice, its balance decreases by the Amount Paid amount that has been specified in the line on the Applications tab.

One released prepayment invoice can be linked to multiple sales orders of the same customer.

Unlinking of the Prepayment Invoice and Sales Order

A user can unlink the prepayment invoice linked to a sales order and link another one, if needed. They unlink the documents in either of the following ways:

• In a sales order on the Sales Orders (SO301000) form: On the Payments tab, the user clicks the line with the linked prepayment invoice and clicks Remove on the table toolbar. They can add a new line and select another prepayment invoice, if needed.
• In a prepayment invoice on the Payments and Applications (AR302000) form: On the Sales Orders tab, the user clicks the line with the sales order and clicks Remove on the table toolbar. They can add a new line and select another sales order, if needed.

Once the connection between a prepayment invoice and a sales order has been removed, the total amounts of the sales order on the Totals tab of the Sales Orders form will be affected as follows:

• The Not Released amount is decreased by the Applied to Order amount of the removed line.
• The Total Paid amount is decreased by the Applied to Order amount of the removed line.
• The Unpaid Balance value is increased by the amount specified in the Applied to Order box of the removed line.

Impact of a Voided Prepayment Invoice on a Sales Order

If a prepayment invoice linked to a sales order has been fully written off by a credit memo and the prepayment invoice has been assigned the Voided status (for details, see Finance: Prepayment Invoices in Accounts Receivable), then on release of the application of the credit memo to the prepayment invoice, the system does the following on the Sales Orders (SO301000) form:

• Reduces the Applied to Order amount to 0 in the prepayment invoice line on the Payments tab. The line is not removed from the tab.
• Updates the values on the Totals tab as follows:
  • Reduces the Not Released amount by the Applied to Order amount
  • Reduces the Total Paid amount by the Applied to Order amount
  • Increases the Unpaid Balanced by the Applied to Order amount