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Vendor prepayments are useful when a business needs to pay a supplier before receiving the related invoice or services. This may happen when a vendor requires a deposit, requests payment before beginning work, or offers favorable terms for paying in advance.
Acumatica allows accounts payable teams to record these payments, track the remaining balance, and apply the funds to future bills from the same vendor. This creates a clear record of both the original payment and how it was ultimately used.
Vendor prepayments are created within the Checks and Payments screen in the Payables module.
When creating a new record, Acumatica will typically default the document type to Payment. Change the type to Prepayment before entering the transaction details.
Next, select the appropriate vendor and enter the amount being paid in advance. For example, a company may create a $5,000 prepayment for a vendor that will provide consulting services over the next several months.
The payment method and cash account automatically populate based on the settings in the vendor record. Review these fields and make any necessary adjustments before saving the transaction.
Once the prepayment has been entered and saved, it’s processed much like a standard vendor payment.
Remove the transaction from hold, process the payment using the selected method, and release it. If the payment is being made by check, the check can be printed and processed through the normal accounts payable workflow.
After the transaction is released, the prepayment will appear with an Open status. This means the funds have been paid to the vendor but have not yet been fully applied to one or more accounts payable bills.
The open prepayment balance will remain available until it is used or otherwise adjusted.
When an invoice is later received from the vendor, enter the bill through the normal AP bill process.
For example, suppose the company receives a $1,000 invoice for consulting services from the vendor that received the $5,000 prepayment. After entering and saving the bill, navigate to the Applications tab.
Any open prepayments associated with that vendor will appear in this section. The user can then decide whether to apply the available funds to the current bill.
Selecting Auto Apply allows Acumatica to automatically apply the available prepayment balance to the invoice. In this example, $1,000 would be applied to the bill, reducing the remaining prepayment balance from $5,000 to $4,000.
Once the bill is removed from hold and released, the bill will show a Closed status because the full amount was covered by the prepayment. The prepayment, however, will remain open because it still has an unapplied balance.
The remaining funds can be applied to additional invoices from the same vendor.
If a second bill is entered for $4,000, the user can return to the Applications tab and apply the rest of the prepayment. After the bill is released, both the AP bill and the prepayment will show a Closed status.
This indicates that the vendor invoice has been fully paid and the complete prepayment amount has been used.
Acumatica continues to display open prepayments on the Applications tab of eligible bills, giving AP users the choice to apply the funds when appropriate. A prepayment doesn’t have to be applied to every bill simply because it is available.
Users can review the accounting entries associated with both the vendor bill and the prepayment from the Financial tab.
When the prepayment is applied, the transaction reduces the vendor deposit balance and offsets the related accounts payable amount. Reviewing the journal entries provides a clear view of how the transaction affected the general ledger.
Vendor prepayments can be difficult to track when they are handled outside the accounts payable system or recorded using manual spreadsheets.
By managing them directly within Acumatica, businesses can see how much has been paid, how much has been applied, and how much remains available.
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