Applying a Vendor Pre-Payment or Purchase Debit

Knowledge Base · Purchasing and Payables

Applies to: All Supported Versions  |  Platform: All Platforms

ARTICLE CONTENTS

1. What Is a Payment Application?
2. Creating a Payment Application Entry
3. Related Articles
4. Reference Links

1. What Is a Payment Application?

Applying a prepayment or a purchase debit can be used to reduce the balance of a vendor account or used to match/clear entries of equal value. For example, if you have a Purchase and a Purchase Debit of the same value (one positive, one negative) you would want to clear the entries by making an application.

Reference: Correcting or Reversing a Posted Purchase to a Vendor

A payment application transaction is typically used in the following situations:

• A Purchase Debit has been entered to record a credit from a vendor and it needs to be applied to the next payment.
• A vendor Pre-Payment transaction needs to be applied to an outstanding Purchase.
• A Purchase has been entered and posted in error. A correction via a Purchase Debit has been entered and both are now showing as outstanding on the vendor activity ledger with a net balance of zero.

2. Creating a Payment Application Entry

To create a payment application entry:

1. Select Payments from the A/P menu or select Payments from the Connected Desktop window.
2. Click Add.
3. From the following Choices window, select Normal Payment, then click the “Proceed with Add New” button or just press TAB.
   
4. Enter the vendor code in the Payee field or press TAB to select from the vendor list. Once the vendor has been selected, the name of the vendor appears and all of the outstanding bills for that vendor are listed below.
   
5. Enter the “Date” of the application. This date should be the same as or later than the date of the latest transaction being applied.

   NOTE It is strongly recommended that the date of the application payment be no earlier than the most current transaction being applied.

6. Verify the Bank Code which defaults from the Vendor window. If the payment is a straight application, the total will be zero and the Bank or G/L accounts will not be affected.
7. Enter a Description.
8. Select the Pre-Payment or Purchase Debit transactions to be applied by pressing TAB through the line, until you see a green check mark appear on the right side of the entry, as shown in the following screen.
   
9. Press TAB to move through the Amount Paid field to use the debit or prepayment. The debit or prepayment will now have a check mark next to it in the list. The transaction total is now a negative amount of the purchase debits or prepayments selected.
10. Select the invoice to apply the debit or prepayment to by clicking on it in the list. The invoice will now have a check mark next to it in the list. The debit or prepayment is now applied to the purchase invoice.
11. If this is a straight application, ensure that the transaction total is zero, as shown in the following screen.
    
12. Click Save or press ENTER to complete the entry.

    NOTE The Payment Method will change to Application if it is a straight match and the total is $0.00.

    

    TIP An application entry with a transaction total of zero does not create a general ledger transaction. An application entry with a transaction total of zero does not print a check/cheque, even if the “Payment Method” selected is Print Check/Cheque when posted, because the amount is zero.

Once the application is posted, all of the fully applied transactions will be closed.

3. Related Articles

• Correcting or Reversing a Posted Purchase to a Vendor
• Entering Vendor Bills
• Voiding a Vendor Payment
• Printing Checks in Connected

4. Reference Links

• Correcting or Reversing a Posted Purchase to a Vendor