A prepayment is a type of invoice you enter to make an advance payment to a supplier or employee. For example, you need to pay a deposit on a lease, or pay an employee an advance for travel expenses. You can later apply the prepayment to one or more invoices or expense reports you receive from the supplier or employee to offset the amount paid to them.
A supplier might send an invoice that references a prepayment. If a supplier reduces the invoice amount by the amount of the prepayment and associated tax, you can use the Prepayment on Invoice feature to enter the invoice. See: Entering Invoices that Reference Prepayments.
You cannot apply prepayments to standard invoices when there are no item distributions or item lines without a valid distribution set.
You can enter two types of prepayments: Temporary and Permanent. Temporary prepayments can be applied to invoices or expense reports you receive. For example, you use a Temporary prepayment to pay a hotel a catering deposit. When the hotel's invoice arrives, apply the prepayment to the invoice to reduce the invoice amount you pay. Permanent prepayments cannot be applied to invoices. For example, you use a Permanent prepayment to pay a lease deposit for which you do not expect to be invoiced.
In the Invoice Workbench you can enter and apply prepayments. In the Quick Invoices window you can enter a Prepayment type invoice.
You enter a prepayment as you enter any other invoice. However, you additionally specify 1) the prepayment type, Temporary or Permanent, and 2) the settlement date, the date after which the prepayment can be applied to an invoice. You can apply a hold to a prepayment if you want to control payment of it. You can also enter an invoice amount that includes a prepayment.
On a prepayment, you can enter any number of distributions, either manually, or automatically by purchase order matching, distribution sets, or allocating. You can also take discounts on prepayments.
You can apply paid Temporary prepayments on and after the prepayment settlement date. You can apply only Item distributions from the prepayment. The prepayment remains available until you apply the full amount of the prepayment Item distributions to one or more invoices. You can review the Prepayment Status Report to check the status of all prepayments in Payables. See: Prepayments Status Report.
When you enter a Standard invoice in the Invoice Workbench, or enter an expense report in the Expense Reports window, Payables notifies you if you have available prepayments for the same supplier.
You apply prepayments to invoices and expense reports differently, depending on where you enter them: Invoice Workbench, Quick Invoices, Expense Reports window, or Oracle Internet Expenses. See the window-specific documentation for details.
When you apply a prepayment, Payables creates a negative amount Prepayment type distribution on the invoice, and reduces the prepayment's available applicable amount. For example, if you apply a $100 Prepayment distribution to an invoice, Payables creates a negative $100 Prepayment distribution, and reduces the Amount Available on the prepayment Item distribution by $100. The account of the Prepayment distribution on the invoice defaults from the Item distribution on the prepayment.
When you apply a prepayment, in addition to updating fields in the Apply/Unapply Prepayments window, Payables updates the following fields. For Quick Invoices and Expense Reports, these values appear after import:
For the invoice:
Invoice Workbench: Prepaid Amount; Status is updated to reflect that the invoice has been paid or partially paid
Distributions window: Prepayment Number; Prepayment Distribution
For the prepayment:
Invoice Workbench: If you have applied all Item distributions, the invoice Status will change from Available to Fully Applied
Distributions window: Prepay Amt Remaining
This discussion includes the following topics:
For information on how taxes are applied to prepayments, see: Taxes on Invoices.
Payables Open Interface Import applies prepayments. You can also apply prepayments to invoices in the Invoice Workbench after you import them.
For invoice records in the Payables Open Interface, Payables applies the prepayment during import, so the available prepayment amount is available to apply to other invoices until import.
You can apply a specific prepayment or multiple prepayments to an invoice. If you enter only a prepayment amount and do not identify a specific prepayment, Payables applies available prepayments for that supplier, in order of oldest prepayment to the newest, up to the prepayment amount. You can specify the first prepayment to apply in the PREPAY_NUM column. If the prepayment amount you enter exceeds the available amount on the specified prepayment, then Payables applies other available prepayments, in order of oldest to newest, up to the remaining prepayment amount.
If you specify a prepayment to apply, you can apply one or all prepayment Item distributions. If you do not specify a value for PREPAY_DIST_NUM, Payables applies the prepayment amount across all available prepayment Item distributions in chronological order, starting with the first prepayment Item distribution, up to the prepayment amount.
You cannot apply more than the total amount of available prepayment Item distributions, and you cannot apply more than the total amount of the invoice record. You cannot enter a number for prepayment amount that exceeds the unpaid invoice amount.
After import you can view the new distributions for the Standard invoice in the Distributions window. On the Prepayment distributions you can adjust the value in the Description field.
The following open interface columns are relevant to applying a prepayment in the Payables Open Interface. You must enter at least either a prepayment amount or a prepayment number. For more details on any column, see: Table Descriptions, Oracle Payables Reference Guide.
PREPAY_NUM
PREPAY_DIST_NUM
PREPAY_APPLY_AMOUNT
PREPAY_GL_DATE
INVOICE_INCLUDES_PREPAY_FLAG
In the Expense Reports window, you apply prepayments, also known as advances, to expense reports during expense report entry. You can specify whether you want Payables to apply to an expense report all outstanding and available advances, one specific advance, one specific advance Item distribution, or a certain maximum amount of advances. Unless you specify a specific advance to apply, Payables applies all outstanding, available advances, starting with the oldest, up to the amount of the expense report. If you do not specify an advance Item distribution to apply, then Payables applies available advance Item distributions, starting with the one with the lowest distribution number. See: Applying Advances Against Expense Reports.
For expense reports entered in Internet expenses, advances are applied during Expense Report Export if the Apply Advances Payables option is enabled. Payables applies all outstanding, available advances, starting with the oldest, up to the amount of the expense report.