Introduced in Microsoft Dynamics GP 2013, Purchase Order Prepayments (POP) helps companies pay vendors prior to receiving all inventory and then entering an invoice. It can also be useful when a vendor requires a prepayment prior to processing an order.
Below we’ve put together directions to help guide you through entering in a prepayment in GP. But before entering in a prepayment amount, you will want to be sure that you have the prepayment functionality set up.
Step one: Setting the system up for prepayments
First, navigate to Purchasing --> Setup --> Purchase Order Processing
In this window, you can select to allow Purchase Order Prepayments at any time. Note that you are not able to mark Allow Purchase Order Prepayments if you are registered for Project, Analytical Accounting or the Multi-dimensional Analysis modules.
If you choose so, you can also set it to require a password to allow prepayments. This password can be up to 10 alphanumeric characters.
You must also identify the posting account the prepayment should go to. I have a prepaid expense account selected for prepaid items.
You can also set the prepayment account as the posting account. This can be done by navigating to: Administration-->Setup-->Posting-->Posting Account
When this is entered, the prepayment account will default to this account entered here if one is not entered in the Purchase Order Processing setup window in the previous step.
Step two: Creating the purchase order
Navigate to Purchasing -->Transactions-->Purchase Order Entry
Then follow these steps:
- Select the type. The PO Number will then auto populate.
- Select the Date of the PO.
- Select the vendor ID.
- Select the currency ID.
- Enter in your line items to order.
- Enter in the prepayment amount in the Prepayment field.
Notice that there is a sign that says ≠ when the amount is entered. This is due to there not being a posted payables payment in the system for this number. If you have a different prepayment account or expense account to utilize, select the blue arrow next to the amount and change the account.
Your last step here is to save the PO.
Step three: Creating the prepayment check
Now, go to Build Payment Batch. Then enter in the Check Batch number.
In the “Payables Batch Entry” window, there is now a check box that says “Purchasing Prepayment Batch.” Select the appropriate checkbook ID and then click Save.
Since the Purchasing Prepayment Batch was selected, choose the POs that have a prepayment on them. This can be filtered by PO Number, or you can simply build the batch to include all open POs.
When printing the checks, you will notice that the checks have the PO number as the voucher number rather than an invoice number that is typically there. The vendor can use this to know which POs is being paid.
As your last step here, post the check batch.
Step four: Receive and Invoice the PO
Now there will be an outstanding payment for that vendor. When the PO is received and invoiced, the prepayment will automatically be applied to the invoice. The below demonstrates the prepayment being applied:
Any Dynamics GP questions?
While that is everything you need to include on prepayments for Purchase Orders in GP, we’re happy to answer any questions you have. Contact us at any time, or continue reading on for more Microsoft Dynamics GP tips.