prepaid purchase orders

MTech has the option to create purchase orders where the product must be paid for prior to being shipped from the vendor. A purchase order will be considered as prepaid if the prepaid option is selected for the assigned payment term in Admin>Business>General>Payment Terms.

The process of creating a prepaid purchase order includes the same options as available in Create a Basic Purchase Order. To view any of the specific requirements, select any of the following links.

• Purchase Order Header
• Purchase Order Line Details
• Approve a Purchase Order
• Posting a Purchase Order
• View Purchase Order Inventory

Create a Prepaid Purchase Order

The following options are outlined in the Prepaid Purchase Order document:

• Purchase Order Requirements
• Creating a Prepaid Purchase Invoice
• Creating a Receiving Transaction

Purchase Order Requirements

1. Create a purchase order as outlined in Create a Basic Purchase Order.
2. In the PO Line Items box, select a prepaid payment term.

 



 

3. When the purchase order is saved, the user will be prompted with an option for multiple receivings for the prepaid purchase order.
1. Yes - there will be multiple receiving transactions for the prepaid purchase order. On the final receiving transaction, the Prepaid Final Receiving flag must be selected. When this occurs, the journal transaction for the receiving transaction will clear any remaining accrual to the purchase price variance account.
2. No - there will be only one receiving transaction and the journal transaction for the receiving transaction will record the full amount to the purchase price variance account if there is are any differences such as excess weight.

Create a Prepaid Purchase Invoice

If the purchase order has been assigned a prepaid payment term, there is a specific invoice type dedicated to prepaid invoices. The reason that there is a separate invoice type is that given there are no receiving  details, the invoice must extract the payment details from the purchase order rather than other invoice types where the details are extracted from the receiving transaction.

1. In General>Purchases>Invoices, select the drop-down menu on the and select Pre Paid Invoice.

2.  In the New PO Invoices box, enter the details related to the prepayment and select OK to create the invoice.

 



 

3. The invoice header will be created with the Invoice Type set to Pre Paid to indicate a prepaid invoice transaction.

Purchase Order Line Details

1. To add the purchase order lines, click on the Invoice Line Details and select .
2. In the Invoice Pre Paid selection dialog, select the purchase order that is to be prepaid and select 'OK' to add the purchase invoice lines.

 



 

3. The purchase order lines will default to the Details grid based on the details that are defined in the purchase order. The Details should not be modified.

 



 

4. Click to save the prepaid purchase invoice and close the transaction.

Post Prepaid Invoice

Once the Prepaid Purchase Invoice has been created and saved, the invoice needs to be posted. The posting process locks the purchase invoice to prevent edits, and creates the journal transaction to record the liability. The UnPost option unlocks the invoice and reverses the journal transactions.

1. In the Purchase Invoice index, select the required purchase invoice and right-click to select 'Post'.

Journal Transaction

The posting process creates the journal transaction.

Create a Receiving Transaction

The process for receiving a prepaid purchase order is the same as an other receiving process. The only difference occurs for a prepaid purchase order with multiple receipts. The system looks to the Multiple Receiving flag in the purchase order to determine if the Final Prepaid Receiving flag is required to record the variance on a transaction.

• Single Receipt - If the multiple receipt flag is not selected in the purchase order, the receiving transaction will record any variances to the purchase price variance account when the receiving transaction is posted.
• Multiple Receipt - In the event that there are multiple receipts, the last receipt must have the Final Prepaid Receiving flag marked. This process will clear out any remaining amounts in the accrual account and expense to the purchase price variance account.

1. Create a Receiving Transaction for any product type.
2. Select the Final Prepaid Receiving flag on the product detail line (only required on the final receiving for multiple receipts).
3. Save and close the receiving transaction.

 



 

4. Post the receiving transaction by selecting the transaction and right-click to select Post.

 



5. The posting process will create a journal transaction to record the amounts for the receiving transaction.
6. If there is no difference from the purchase order quantity and the received quantity; the journal transaction will simply reverse the accrual and record the amount to inventory.

 

DEBIT	Product Inventory
CREDIT	Accounts Payable Accrual






 

7. If t here is a quantity difference, there will be a purchase price variance incurred on the journal transaction. Depending on the variance, the transaction can be a gain or loss. The company has the option for the amount to remain as a variance or allocated to current period production if required.