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Vendor Prepayments

  • 1.  Vendor Prepayments

    Posted Sep 11, 2019 11:14 AM
    Hello Nav friends!

    I have an urgent scenario I'm looking for help with to see if anyone has encountered this before.

    Here's the scenario in an simple example form.

    A) I am working with a vendor that I need to purchase bread from. I need to prepay them $200,000. (I understand how to complete this portion).

    Here's the part I'm muddy on:

    B) I will be receiving weekly deliveries/invoices from this vendor and will need to issue Po's then as well. In terms of applying these PO's I need to be able to:
         1) deduct 50% of that and every weekly vendor invoice from the $200,000 I fronted AND then pay the other 50% of the weekly invoice to the vendor as I normally would. ​

    Has anyone had this scenario before that can help provide some direction? Thank you!

    Matt Dusenberry

    Academy - Online Interactive Learning from Experts

  • 2.  RE: Vendor Prepayments

    Posted Sep 12, 2019 12:08 PM
    We have done some of this before.  We created a secondary Vendor Deposits account and placed the initial deposit in there.  Before we posted the invoice for a purchase order, we would add a G/L Account line at a negative value to reduce the invoice value and draw from the Vendor Deposits account.  Then the invoice would post with a smaller balance remaining.

    Eric Moe
    Global Supply Chain Manager
    Industrial Revolution
    Tukwila WA

    Academy - Online Interactive Learning from Experts

  • 3.  RE: Vendor Prepayments

    Posted Sep 12, 2019 12:27 PM
    Thanks Eric! This is essentially what we did yesterday and tested through. Thanks for the response and assurance that it sounds like we are the right track.

    Matt Dusenberry
    Group O
    Milan IL

    Academy - Online Interactive Learning from Experts

  • 4.  RE: Vendor Prepayments

    Posted Sep 13, 2019 09:11 AM
    Hi Matt,

    We have done this same process using the vendor deposits account as Eric described with one additional point. We actually put the negative line for the vendor deposits account on the PO (positive quantity, negative amount) and go ahead and post the receipt for the negative line. That way, the PO can be received as usual, but we won't miss applying the negative line when the vendor invoice is processed.

    We process all of our vendor deposits this way. One word of caution, be sure to mark the negative line as nontaxable so that it does not complicate any sales tax calculations on the purchase invoice.

    Ken Elliott
    Billy Graham Evangelistic Association
    Charlotte NC

    Academy - Online Interactive Learning from Experts

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