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[Tiffany Thomas]

Does anyone have any experience with keeping track of credit memos from prepaid vendors? In our experience, the credit memo does not appear when we issue the next payment through the Payables Batch Entry > Purchasing Prepayment Batch and it makes it difficult to know if we should pay the next prepayment amount in full. Does anyone know if there is a way within GP that it would match the prepaid with a credit memo or can you give advice on how you’ve kept track outside of GP? Thank you so much

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Tiffany Thomas

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[Thomas Hill]

When I started in the company (on GP2010) when a prepayment was needed for a purchase order, using the purchase order as the source form (po number as the invoice number) we posted a debit to the Prepaid Inventory account.  When the item was received, a credit memo was posted to clear the Prepaid Inventory account, and apply to the invoice.   

Our problem was that from when the prepayment was done, until the product was received, several months might elapse.  So we changed to our current method, posting a debit memo and the credit memo at the same time.  Using the debit memo to process the prepayment; leaving the credit memo on the aging (to be applied).  

I have recently considered the ‘new’ prepayment option introduced in GP2013.  I have questions that have not been answered by the videos on using the procedure.  I am going to have to play in our test company.  

I have a purchase order.  The vendor wants 50% prepayment to start.  Later they want the balance in order to ship.  Can I do multiple “deposits/prepayments”?

When I do the prepayment, is it reflected on the Payables Trial Balance?

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Thomas Hill
Staff Accountant
M&A Technology, Inc.
Carrollton TX
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[Thaddeus Suter]

If you are using Vendor Prepayments in Purchasing the Prepayments typically post (debit) to a  Prepaid Expenses asset account. You can reconcile this account using Smartlist Purchasing Payables Transactions transactions by Vendor and exposing  TRX Source (where PPPMT) and the Document Amount and the Current Trx Amount. The sum of the Current Trx Amount column is your Prepaids Account reconcile balance.

If you need it date sensitive, then in Reports AP Trial Balance these Prepayments also exist as Open Unapplied AP Transactions on the Vendor. You will need to expose the TrxSource so you can isolate the PrePayments from the other Payments in the report.

In Reconciling Total AP Trial Balance to the GL you  must include the Prepayments account in addition to your AP Account(s)! There should be a Report Option checkbox-exclude Prepayments….its only been maybe five years so not likely.

Open Prepayment Payments do not show up in the Apply window as they cannot be manually applied to other Invoices. They are reserved and can only be Applied to the correct Purchase Order at Shipment/Invoice or Invoice.

You can only do one Prepayment per PO….but you can always do a second Payment as a normal AP check’pmt and leave it Unapplied on the Vendor. It will show up same as the PO Prepayments in the Trial Balance but I would not post it to the Prepaid Assets account as that then pooches your reconcile of that account using Smartlist or the TRX Source = PPPMT in the TB Report. Since it is for shipment, then post as Debit AP and Credit Cash. The Vendor should send you an invoice on shipment shortly so if the payment is not material to the balance sheet generally then there is no need to create an asset for a couple days but that is a choice of the controller.

The PPPMT transactions should be used where you need to specifically reserve the money to a PO and you need to properly reflect a material asset account (prepaids) over a period end(s) such as for 10-Q, 10-K reporting. The limitation is it is messy to move it around or apply it to other invoices than those for the PO it was created. You can reconcile the account with either Smartlist or the AP Trial Balance by exposing the columns I listed.

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Thaddeus Suter
Retus, Inc
HELOTES TX
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[Thomas Hill]

Thaddeus, thank you for the great explanation.  I played with it a little in our test company.  I will be enabling it shortly after EOM close. 

Have a great day.?

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Thomas Hill
Staff Accountant
M&A Technology, Inc.
Carrollton TX
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[Thomas Hill]

This month I tried the PREPAYMENT feature.  I had two different purchase orders for the same vendor, that wanted 50% for each.  No problem.  I followed the procedure.  All worked well, except.  It deposit went to a separate payment number.  To do the ACH we added them together.  

Today, the Accounting Manager asked if I had unposted batches.  The AP Trial Balance was not tying to the General Ledger.  I ran the RECONCILER.  The different was the two prepayments.  We are going back to the OLD WAY.  

I liked how easy it was to do the prepayment.  I liked that when I was ready to enter the invoice, the prepayment would be “pulled” back from the prepaid Inventory account.  

What is not good?  The AP Trial Balance does not tie out to the AP Control Account.  A thought that came to me, as I typed, change the GL for the prepayment toi the AP Control Account.  Comments questions concerns.

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Thomas Hill
Staff Accountant
M&A Technology, Inc.
Carrollton TX
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[Thaddeus Suter]

Well as I said in the write up above, when Reconciling Total AP Trial Balance to the GL you  must include the Prepayments account in addition to your AP Account(s)! There should be a Report Option checkbox-exclude Prepayments….its only been maybe five years so not likely.

Typically you expose the TRXSORCE and identify PPPMT numbers to segregate them in Smartlist or the TB Report Option.

In any case, I believe the real weakness is the difficulty in “moving” Prepayments once they are attached to a PO. That is a chore.  The only real strength is they are attached and cannot e applied elsewhere and the Asset account can be managed as a subledger thru AP.

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Thaddeus Suter
Retus, Inc
HELOTES TX
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[Thomas Hill]

Thaddeus, I really appreciate the explanations.  Sometimes I am a little slow… but when I get it I get it.

You comment:”. . . elsewhere and the Asset account can be managed as a subledger thru AP.” is a manual process not something through Great Plains.  

Yes, it would be nice to have an option to exclude PPPMT transactions.  

Have a great weekend.

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Thomas Hill
Staff Accountant
M&A Technology, Inc.
Carrollton TX
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[Thaddeus Suter]

You don’t want them manual. You are able to create the AP and PPMT reconciling subledger reports in GP with GP Report Writer. That is one of the benefits of using the PPPMT. Also by exposing the PPPMT Transaction sources in Smartlist you can make a Favorite for reconciling just the Prepayments Asset Account. That Smartlist report is real time in GP and not date sensitive.

If you need it to be date sensitive (and most people do) then it is done in the GP Report Writer  tool using one of your AP Trail Balance Options. Again you expose the Transaction Source PPPMT doc numbers and the most elegant method is to use Conditionals and Restrictions in Report Writer to create a modified AP TB Report that on one side removes PPMTs from the report and on the other side returns only PPMTs in the report.
That way you have can both reconciling reports as GP run reports. Exclude Fully Paid Documents is typically always marked so you can  key of that for True AP and IntercoAP  and if Unmarked then PPPMT.

The other thing you can do for reconciling is simply use a  data Sort option and thus have a single report but you must include all GL Accounts that carry AP and PPPMT. Most GLs have more than one AP Account anyway as I like to separate Intercompany APs in the GL for easier elimination so typically there are 6-8 AP accounts or more ( for sister companies)  that in total will tie to the AP Trail Balance account (if it is run as a single report). In those cases, I run the AP Trial Balance by Vendor Class for Interco vendor and create a Report Group ofmultiple Report Options.

You can always make these AP Trial Balance report “Excel ready” by eliminating headers, page breaks, skip lines and so on and have them auto print to a file

However method you choose, once you make the Options and modify in Report Writer with restrictions, sorts or conditionals, then you create the Group so they can run together.

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Thaddeus Suter
Retus, Inc
HELOTES TX
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[Thomas Hill]

Thank you.  You keep ‘nudging’ to learn more.  AND I do appreciate that.

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Thomas Hill
Staff Accountant
M&A Technology, Inc.
Carrollton TX
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