Sales Order Prepayments

Overview

The Sales Order Prepayment function can be used anytime a payment is received or desired to be received before the delivery of goods and services. Once Prepayments are created and released, they can be applied to invoices generated by the Sales Order module.

  IMPORTANT  When using Rootstock Financials, to apply a prepayment to the Sales Orders created for the Prepay Only Customer (if 'Prepay Only' is True on the Customer Master > Credit Tab), the prepayment invoice must be transferred and paid using the Cash Receipt. Otherwise, the system will not allow fulfillment of the Sales Orders created for that Prepay Only Customer. For more details, refer to Steps to process Payment for Prepayment Invoice using Cash Receipt section (below).

SO Prepayment records are auto-generated as the user completes a payment using the Payment Gateway functionality (from either a Sales Order Header or a Sales Order Invoice).

They also can be added manually using the below Navigation.

Navigation

Sales Order Prepayment (Object Label: Prepayment Detail)

Processing
 
To access the 'Sales Order Prepayment' UI, click 'Sales Order Prepayment' from the Site Map under Sales Order Processes.

Overview – Standard Prepayment Functionality

The three types of Prepayments called "Application Availability," Customer, Project, and Sales Orders.

1. Customer:  This type of Prepayment can be applied to any of the Customer's invoices.

2. Project:  This type of Prepayment can be applied to the Customer's invoices under the indicated Project.

3. Sales Order:  This type of Prepayment must be applied to invoices related only to a particular Sales Order.

Application Methods

The prepayments can be applied both automatically and manually.

There are three methods by which Prepayments can be set up to be applied automatically to future invoices. 
 

1. Maximum Amount:  This method will apply the entire amount of any unapplied Prepayment to the invoice not exceeding the invoice amount.

2. Percentage of Invoice:  This method will apply some portion of the Prepayment amount to the invoice as a percentage of the outstanding invoice. For example, if a Percentage of 10% has been indicated, a Prepayment has been made for $500, and the outstanding invoice is for $1500, $150 of the Prepayment will be applied to the invoice.

3. Percentage of Prepayment:  This method will apply a specified percentage of the Prepayment amount to the invoice. For example, if a Percentage of 10% has been indicated, a Prepayment has been made for $500, and the outstanding invoice is for $1500, $50 of the Prepayment will be applied to the invoice.

  NOTE  'Manual Application' can be selected if an automatic application method is not desired.
 

• Once a Prepayment has been created, the page shown below is displayed. 

• The Release PPY button must be clicked to create the Sales Order Invoice for the deposit amount. It can be forwarded to the customer before the deposit receipt (customer requests invoice to present to Accounts Receivable to effect payment) or transferred to Accounting as a Receivable transaction so that the customer can apply it to the Sales Order. 

• The Invoice Number field provides a link to the resulting Sales Order Invoice.

• When Prepayments of the Application Availability type 'Maximum Amount,' 'Percentage of Invoice,' or 'Percentage of Prepayment' are created AND Released before a Sales Order Invoice is created, the system will notify the user that a Prepayment amount is available to apply to Sales Order Invoice and give you the option to automatically apply based on the rule set or decline and manually define the amount to be applied to the Sales Order Invoice when it is created. 

• When a 'Manual Application' Prepayment is created and released, it must be manually applied to the Sales Order.

No matter which type of Application Availability is used, if the Sales Order Invoice is created before the Prepayment Invoice is created and released, the Prepayment must be applied to the Sales Order manually.

Any Prepayment can be removed from a Sales Order Invoice or adjusted on the Sales Order Invoice if the Sales Order Invoice has yet to be transferred to Accounts Receivable and is in an unapproved status.  

Fields

Division:  The current Division the user is operating in and the Division to which the Prepayment and Customer details will be applied.
 
Prepayment Number:  Auto-assign on save.
 
Customer Number:  The Customer's ID is indicated here. A Customer record must exist to create a Prepayment.
 
Customer Bill To Address Sequence:  A specific Customer Bill-to address is indicated here.
 
Amount:  The amount of the Prepayment is set on this field.
 
Application Availability:  Either 'Sales Order', 'Project', or 'Customer' is indicated here as the Prepayment Type.
 
Alternate Sales Order Customer:  If the application type is ‘Sales Order, ' the Alternate Sales Order Customer can be indicated in this field.

Override to Invoice and Credit Customer:  Indicates Override to Invoice and Credit Customer.

Sales Order Number:  If the application type is ‘Sales Order’, the specific Sales Order must be indicated in this field. If an Alternate Sales Order Customer is selected, then the Sales Order related to the Customer will be shown.
 
Project Number:  If the application type is ‘Project’, the specific Project Number must be indicated in this field.

Prepayment Account:  The revenue account for the Prepayment is required here.

Invoice Number:  The Invoice Number of the Prepayment is indicated here.

Credit Memo:  The Credit Memo created for the Prepayment.
 
Prepayment Reversed:  This flag indicates whether or not the Prepayment has been reversed.

Internal Comments:  Internal comments related to the SO Prepayment can be entered here.
 
External Comments:  External comments related to the SO Prepayment can be entered here.

Application Method:  Here, the application type of ‘Maximum Amount’, ‘Percentage of Invoice’, ‘Percentage of Prepayment’, or ‘Manual Application’ is selected.

Application Percentage:  If the Application Method is either ‘Percentage of Invoice’ or ‘Percentage of Prepayment’, then a percentage must be entered here.

Contains Prepaid VAT:  Indicates the Prepayment. Includes VAT, which will be recognized at the time of Cash Receipt.

Move to Unearned Revenue at Cash Rcpt.:  Indicates the Non-VAT portion of the Prepayment Amount is to be moved to Unearned Revenue at the time of Cash Receipt.

Tax Location:  When the Prepayment contains Prepaid VAT, this field connects the Prepayment to the associated VAT Class.

Unearned Revenue Account:  This account is the destination for the non-VAT portion of the Prepayment, which is moved at the time of Cash Receipts.

Sales Order Prepayment - Processing
 
Once the Prepayment details have been decided upon, click Save. Some additional fields and buttons are made available at this point.

   NOTE  When a SO Prepayment is generated from Payment Gateway processing, the Prepayment will be created at a released status, and no Prepayment SO Invoice will be created for it. Instead, we will generate the corresponding GL Header and Line records for the payment. Also, when using Payment Gateway, the ‘Sales Order Payment Transaction’ and ‘Sales Order Payment Transaction ID’ fields will be filled on the SO Prepayment record.

If the SO Prepayment was added manually, upon PPY Release, a Prepayment SO Invoice record will be created and associated with the SO Prepayment.
 

Add Invoice to Batch:  Clicking this button before releasing the Prepayment will result in the Prepayment Invoice being released/added to a Batch.

Release PPY (Create Invoice):  Clicking this button releases the Prepayment by creating a Sales Order Invoice of the Prepayment type. A Recall Released Prepayment button is made available after the Release PPY button is clicked, and the 'Release Date' and flag will also be populated.

Release Date:  The date the Prepayment is Released.
 
Amount Applied:  The amount of the Prepayment applied to the invoice(s).

Recall Released Prepayment:  Clicking this button recalls the Prepayment by deleting the created Sales Order Invoice. After the Prepayment is recalled, the value of the field 'Release Date' and the flag 'Released' are cleared. If the Prepayment is applied to any Sales Order, then the Prepayment Amount will be reduced from the 'Prepayments Associated to Sales Order' value on the associated Sales Order.

Sales Order Payment Transaction:  (Display only) When checked, indicates that this Prepayment was spawned as the result of Sales Order Payment Processing via Service Provider Gateway where a payment processing Service Provider is used (e.g., PayPal) to process and manage the payment. These types of Prepayments do not generate Prepayment SO Invoices, and the AR is handled with journals instead.

Sales Order Payment Transaction ID:  (Display only) When Sales Order Payment Transaction is checked, this is the Transaction ID issued by the Payment Service Provider when the order is charged to a debit/credit card.

Close Out PPY - Credit Balance:  Clicking this button will create the Credit Memo for the prepayment amount, the 'Amount Applied' field will be updated, and the 'Fully Applied' flag will be marked as TRUE. This button will be displayed after the Prepayment Invoice is approved and Transferred to A/R.

  NOTE  On the Prepayment Invoice, if the user creates the Credit Memo using the Credit This Invoice button, then this Close Out PPY - Credit Balance button will not be displayed.

Once the Sales Order is processed to the point where a Sales Order Invoice is created, the Prepayment Application can be seen on the Sales Order Invoice. The Prepayment can also be adjusted using the Apply Prepayments button on the Sales Order Invoice UI before approval.

When a Prepayment is applied to a Sales Order Invoice, it generates a Prepayment Applied record. A Prepayment could be applied to multiple Sales Order Invoices, which would sum up to its Prepayment's Amount.

The list of Prepayment applications can be seen at the bottom of the Sales Order Prepayment page under the Details tab.

AR Reporting for SO Invoices with Applied Prepayments

When a Sales Order Invoice is Approved, the system generates the Account Distribution, with each account number's credit and debit balances.

Approved Sales Order Invoices that have Prepayments applied generate an Account Distribution Detail record for each of its applied Prepayments, visible by clicking the Account Distribution button on approved Sales Order Invoices.

The Account Distribution Detail record is used to pass the accounting output details from the Sales Order Invoice to Rootstock Financials or the financial application in use and, for reporting purposes, has a linkage to the Sales Order Prepayment from which it was spawned in the form of a lookup field to the Prepayment Applied object.

Steps to process Payment for Prepayment Invoice using Cash Receipt

When using Rootstock Financials, the Prepayment Invoice can be paid using Cash Receipt as follows:

1. Releasing the Sales Order Prepayment will create a Prepayment Invoice.

2. Approve the Prepayment Invoice, then transfer it to AR.

3. Transferring to AR will create a Receivable Transaction in posted status.

4. Now, create a Cash Receipt and process payment to the created Receivable Transaction. For more details, please refer to Cash Receipts Overview.

SEE ALSO
 

Sales Related Prepayments Overview
SO Invoice and Credit Memos
Sales Order Fulfillment
Sales Order Control