Vendor prepayments, and prepaid inventory, are a hassle for accounting and AP departments, but we have only seen them increase as a response to long lead times and opportunity for cash flow control. In order to cut down the amount of clicks and amount of data to track, Cetec ERP has developed a Vendor Prepayment feature and object.

Lets break down the Vendor Prepayment feature and a few reports you will have at your disposal, all to help simplify this common headache of a process.

Lets start by understanding what the prepay object is and how to map it in your GL mappings.

  • A user with an admin user role can access the Config Settings in the Admin section of Cetec ERP.
  • Click GL Transaction Mappings, then Vendor Unapplied Cash.
  • Select the account you want to Debit for the prepayment - usually a prepaid inventory account - and click Set.

Now that your GL is properly configured, youre ready to use the Prepay feature. Lets add a prepayment to a PO.

  • Search for a PO in the global search tool. See the Prepay option on the left-hand side of the PO. Clicking this will give us the Prepay pop up/prompt. Click Prepay.
  • Type the amount you are prepaying in the New Vendor Prepayment Amount field. Select your Payment Method, scroll down, and click Prepay.

Once you have created the prepayment, you have multiple options available to review the information.

  • Click Prepayments + to view the prepayment object on the PO.
  • Click Prepayment to view the details. You will be taken to an AP Payment screen.
  • Click Unapplied Cash to view the object by itself. Once on the Vendor Unapplied Cash screen, click Ledger to see the ledger implications of the unapplied cash. Please note that the Prepaid Inventory is debited based on your mappings.

Lets look at entering the voucher for the final invoice. At this point, its understood that youve received the parts, and you can attach the receipt to a voucher.

  • Enter all standard voucher info and attach the PO or receipt according to the standard vouchering process as well. Click Submit to save your changes.
  • When youre ready to pay the invoice, the prepayment will be applied to the final payment. Click New Payment at the bottom of the voucher screen to enter a new payment. The Voucher screen now includes a Vendor Unapplied Cash section where you will apply the prepayment amount to the final payment. Click the Include? checkbox on the unapplied cash and type the amount to apply in the Apply textbox. Scroll down, click the voucher ID you are paying, and click Update. Click Mark As Paid, then check the ledger on the left side menu.

Now you can see the ledger impact from the entire transaction.

  • The unapplied cash/AP payment debits Prepaid Inventory and credits Cash. AP gets washed due to both entries. The receipt still impacts Inventory and Accrued AP (standard), and the voucher impacts the Accrued and AP accounts (standard).
  • The AP payment credits the original prepaid inventory account from the initial prepayment/unapplied cash entry.
  • To see a report of the vendor unapplied cash objects, go to the Accounting tab and navigate to the A/P dropdown menu. Select the Vendor Unapplied Cash List option. Use this to review all open unapplied cash objects (prepayments) that have not yet been applied to final invoices. Feel free to run this report by all vendor unapplied cash objects (applied or not). Click Submit to see a status of Closed means applied to final AP Payments.
  • Keep in mind, any open vendor prepayments impact the vendors AP Summary/Details as well. See the additional line item in the AP Details for Vendor Unapplied Cash


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