Prepayments in Oracle Fusion

A prepayment is a type of invoice you enter to make an advance payment to a supplier or employee. In Oracle Fusion Payables, a prepayment is a type of invoice that you can apply to an outstanding invoice to reduce the invoice amount.

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.

You can enter two types of prepayments: Temporary and Permanent.

Temporary:

The “Allow prepayment application” option on invoice indicates that the prepayment is available for application and classifies the prepayment as temporary. An example of a temporary prepayment is a catering deposit to a hotel. When the invoice from the hotel arrives, you can apply the prepayment to the invoice to reduce the invoice amount due.

Permanent:

If you disable the “Allow prepayment application” option, you can't apply the prepayment and the prepayment is classified as permanent. An example of a permanent prepayment is a lease deposit for which you don't expect to receive an invoice.

• Temporary. Can apply against invoices.

• Permanent. Cannot apply against invoices.

 

Applying a Prepayment:

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 $618 Prepayment distribution to an invoice, Payables creates a negative $618 Prepayment distribution, and reduces the Amount Available on the prepayment Item distribution by $618. The account of the Prepayment distribution on the invoice defaults from the Item distribution on the prepayment.

 

 

Prepaid Amount. The sum of prepayment amounts that have been applied to an

invoice. This is the sum of the invoice's Prepayment type distributions.

Prepayment Settlement Days: Number of days you want Payables to add to the system date to calculate a default settlement date for a prepayment. Payables  prevents you from applying the prepayment to an invoice until on or after the settlement date.

Payment of Prepayment:

 You can pay a prepayment in a currency that's different from the invoice currency. To apply that prepayment to an invoice, the invoice must have the same invoice currency as the invoice currency of the prepayment. For example, if you have the following payables documents:

• Invoice: Invoice currency is USD, payment currency is CAD
• Prepayment: Invoice currency is USD, payment currency is RUB

You can apply the prepayment to the invoice because both payables documents have an invoice currency of USD.

Unapplying a Prepayment:

If a prepayment is mistakenly applied to an invoice, you can unapply the prepayment. The prepayment is then available for application to another invoice.

Important Points:

1.     You must fully pay a prepayment before you can apply it.

2.     On the Manage Invoice Options page, you can set prepayment options, such as whether to show available prepayments during invoice entry.

3.     Prepayment gets created with “Immediate” payment term.

4.     After validation prepayment type of invoice status changes to “Unpaid” while or standard invoice validation status changes to ‘Validated’.

5.     If a prepayment is matched to a purchase order, purchase order quantities are updated during prepayment application.

6.     After prepayment invoice paid, its status changes to ‘Available’ and When get fully applied to invoices then status changes to ‘Fully Applied’

Prepayment Statues:

 

Q: Can I match a prepayment to a purchase order?     

Ans: Yes, and the invoice that you apply the prepayment to must have at least one line matched to the same purchase order as the prepayment.