Principles
Prepayments are payments that are invoiced and posted on a prepayment sales or purchase order before final invoicing. You can request a deposit before you produce an item or deliver a service to order, or you can request payment before you ship an item or deliver a service to a customer. Prepayments are used in BC for invoicing and collecting prepayments that are requested from customers or for paying advances to vendors. This way, you can be sure that all payments are posted against certain invoices.
Prepayment properties can be defined for a customer or vendor for all items or only specific items. After you complete the required setup, you can generate prepayment invoices from sales or purchase orders for calculated amounts. Or you can create backups manually according to your own needs.
MS regularly updates the documentation for this setting area. Documentation valid for BC20 and above is available at the following link:
Advance Payments activation and upgrade - Business Central | Microsoft Learn
Dependencies and assumptions
Additional dial settings may be required to complete.
Setting Up Backups
Advance Letter Templates are the default settings of the application. They are used to divide advances into groups and contain default settings for advance invoices that are created from templates.
To set up a backup template, follow these steps:
Use the system magnifier to search for Advance Letter Templates, and then select the related link.
To set up a template, you need to fill in the following fields:
Code
Each template has its own unique code defined for the area of sales or purchasing. You can create and use as many backup templates as you want, but at least one for each region
Description
Detailed description of the backup template
Sales/Purchase
Defines whether the template is intended for sales or purchasing
Advance Letter Document Nos.
No. Series for Advance Invoices
Advance Letter Invoice Nos.
Numbers for Advance Tax Documents
Advance Letter Cr. Memo Nos
Advance Tax Credit Memo Nos.
Advance Letter G/L Account
Account for Records of Advance Payments (Advance Balance)
VAT Bus. Posting Group)
Presetting the VAT business posting group for the prepayment template. If the field is blank, the VAT business posting group from the customer/vendor will be used in the prepayment, if set for the template, it will be used from the template.
Automatic Post VAT Document Posting
Specifies whether the prepayment should be automatically detaxed automatically or manually when the prepayment is used in the final invoice. On the sales side, it also affects the automatic creation of a tax document for the advance payment (on the purchase side, the tax document for the advance payment is always posted manually by the user). You can change the value in the field in individual documents.
Document Report ID
specifies the report number for printing the advance invoice (standard printing of purchase advance R 31016, sales advance R 31014)
Invoice/Cr. Memo Report ID
specifies the report number for printing the advance tax document or credit note (standard printing of purchase tax document R 31017, sales tax document R 31015)
After you fill in the template row, you can close the report.
To set up VAT posting for advance payments, follow these steps:
Search for VAT Posting Setup via the system thread, and then select the related link.
On the overview, select the posting group combination you want to edit and click the Edit button.
On the Posting VAT Setup tab, in the Advance Payments tab, select the Fill in account numbers field as necessary.
Sales Prepayment Account, respectively. Sales/Purchase Advance Letter Account
The VAT account of the sales prepayment, respectively. Sales/Purchase Advance Letter VAT Account
Tax documents or advance payment credit notes will be posted between these two accounts. The Sales/Purchase Advance Letter Account may or may not be set up in the same way as the Advance Letter G/L Account in the Advance Payment Templates (Balance Accounts), the Sales/Purchase Advance Letter VAT Account is used to record VAT amounts from prepayments.
After setup, you can close the card and overview.
When posting VAT entries from prepayments, the standard fields "base" and "amount" are used. Therefore, even in the VAT statement, only the standard "base" and "amount" options are used in the Amount Type field. VAT items posted from the prepayment are thus automatically included in the VAT statement, there is no need to prepare separate lines for them within the VAT statement.