At times, you may have vendors request a payment deposit on orders before they actually approve your purchase orders. The NetSuite Vendor Prepayments feature allows you to manage these kinds of payments. A prepayment is a real, General Ledger-posting kind of payment, but it’s just not connected to any POs yet. Let’s take a look at how this feature works and how you can get it set up in your NetSuite account.
Vendor Prepayments Overview
First, how exactly do vendor prepayments work? When you use the Vendor Prepayments feature, you can do things like—
- Apply prepayments against existing open vendor bills
- Use multiple prepayments for a single vendor
- Apply prepayments either manually or automatically
- Split a prepayment amount across multiple vendor bills
- Set up a vendor prepayment approval process
And that’s not even all you can do with prepayments! This feature enhances your vendor payment process, giving you maximum control and flexibility over how you pay your vendors.
How to Set Up Vendor Prepayments
To set up the Vendor Prepayments feature, you’ll need to enable the feature, set up a vendor prepayment account, and set up the appropriate permissions.
Enable the Vendor Prepayments Feature
First, you can enable this feature on the Advanced Features section of the Accounting tab in Enable Features. If you ever need to disable this feature once you’ve used it, you can do that after deleting any vendor prepayment transactions.
Set Up a Default Vendor Prepayment Account
To use Vendor Prepayments, you’ll need to set up a Vendor Prepayment account. This account is used to track prepayment funds. You can either create an entirely new account or use an existing account, as long as the account is an Other Current Asset type account.
You can set the default Vendor Prepayment account at the company level or the subsidiary level, depending on whether or not your company has OneWorld. To set the default at the company level, choose the appropriate account in the Accounts Payable section of Accounting Preferences (Setup > Accounting > Preferences > Accounting Preferences). Or to set up the default account at the subsidiary level, choose the appropriate account under the Preferences subtab on each subsidiary record.
Set Up Vendor Prepayments Permissions
Who can work with vendor prepayments transactions? There are two permissions that affect vendor prepayments: Vendor Prepayment and Vendor Prepayment Application. Any roles that have the Vendor Prepayment permission can work with vendor prepayment transactions (depending on their permission level). And the Vendor Prepayment Application permission enables roles to work with applications for vendor prepayments.
How to Use a Vendor Prepayment
What does using vendor prepayments look like in practice? You’ll need to enter the prepayment and then apply it to purchase orders. Let’s see how you can do that.
Enter the Vendor Prepayment
To actually enter a vendor prepayment, navigate to Transactions > Payables > Enter Vendor Prepayment.