Prepayments of Suppliers Bills

KristE

Hi,

We frequently prepay suppliers, and pay deposits on equipment we have ordered. When we enter the payment against the purchase order it receipts the item in Reckon which we do not want as this makes it difficult to track which orders are actually received into the warehouse. Does anyone know if there is there an easy workaround for this? Or if there is a Reckon addon we can purchase to assist with/solve this as we are doing this more and more frequently.

We do not want to just have the credit sit on the suppliers account un-allocated as we have a high volume of orders and it is easy to lose track of which order the payments should be applied to once the inventory arrives.

Thankyou

Acctd4

Hi KristE

How are you currently recording these purchases ? Are you entering Bills ? If so, rather than making a Bill Payment, create a Write Chq to the Supplier, posting to either a Pre-Payments current/other asset account or to your Accounts Payable account on the Expenses tab (eg say no to the "Receive against a PO" prompt). This will ensure the payment is recorded at that time without affecting the actual Item status. NB: DO NOT ENTER A TAX CODE - This is NOT the supply/purchase, but simply a pre-payment! If you want to, you can enter any relevant order info in the Chq Memo.

Once the Item is received, edit that same Chq by deleting that previously-entered Expenses tab line & instead, click into the Items tab & on the Select PO button when ready to "Receive ..." the Items themselves:

KristE

Hi Shaz,

Thankyou so much for your response, I did not know that allocate to PO button was on write cheques, thats handy.

The problem we still have with this method is that the warehouse staff are responsible for receipting in items and as such would enter in an item receipt against the PO.

It appears once the item has been receipted in that you cannot allocate the write cheque to it as it is then an item receipt rather than a PO.

Is there a way to link that cheque to an item receipt?

Kristy

Acctd4

Hi Kristy

No - rather than creating an Item Receipt, they would receive the PO via the Chq as per above 😊

KristE

Hi Shaz,

OK Thanks, that wouldn't work for us as the warehouse staff are not authorised to enter cheques into Reckon and we do not want to adjust this either.

Thanks anyway.

Kristy

Acctd4

Hi Kristy

Ah ... I thought you were asking how the warehouse staff can do it - In that case they can still just continue entering their Item Receipts then!

As per above, you would need to use Accounts Payable as the account to allocate the pre-payment Chq. (This ensures it will display in your Pay Bills window to apply it):

Once you convert the Item Receipt(s) to a Bill(s), the Chq pre-payment will still be reflecting as a Credit in your Pay Bills window which you can then allocate accordingly:

Graham Boast

Hi Shaz @Acctd4 - don't like your initial suggestion - if you do the payment in one accounting period then receive it in another, receiving the PO against the cheque has the potential to change GST, Inventory and COGS figures. If you change the date of the cheques, then you are potentially mucking up your bank req.

Putting it to Accounts Payable is better 🙂

If you need to show supplier prepayment, you can do the same process with receive bills, but use the items tab to receive the stock and the expenses tab to clear the prepayment.

This same technique is also adaptable for GST on imported goods.

Graham Boast 0409317366 graham@reclkonhelp.com.au

Acctd4

@Graham Boast Yes, using a Bill instead of a Cheque certainly eliminates any figures being changed for GST - The only issue with using a Bill is that it doesn't allow for the Items to be received at an earlier date date whilst maintaining the accuracy of A/P eg due date for balance payable. Deleting or minusing the prepayment line will have the same effect either way as there's no tax code.

The rest of your suggestion is the same as what I was advising 😬

Graham Boast

Hi Shaz @Acctd4

This was the suggestion I thought was dangerous:

Once the Item is received, edit that same Chq by deleting that previously-entered Expenses tab line & instead, click into the Items tab & on the Select PO button when ready to "Receive ..." the Items themselves:

If the cheque was dated in the previous period, and you are bringing in items with GST coding, then you are effectively changing the allocation from prepayments to inventory asset and GST Payable. If you redate the cheque to today, then you are mucking up your bank req.

I'm not trying to be critical, I'm just saying writing a cheque to prepayments, and then later using the select PO button is a little like giving a gremlin water after midnight.

Graham

Acctd4

Haha @Graham Boast - Yes, you do make a good point 😊

I guess I was assuming once the goods are paid, they are received promptly thereafter, but you're right - there could definitely be a reporting period crossover that would make that problematic, particularly if the Items are not local as there can be significant delays in receiving them then 😬

My suggestion works for me as us experienced gremlins are able to identify that scenario! 🤭

Using Bills, wouldn't the Bill Payment still create the same date issue as a Cheque as this will still override the Bill date for Cash-basis GST though ?

Graham Boast

I don't think so as there is no reckon link from the initial cheque to the bill payment as the bill is $0 value, so no credit is applied to the payment.

Acctd4

Your explanation covers receiving the goods & the bill but I'm a bit puzzled about the initial payment ? If there's no link/allocation, how are you entering that payment & how does it get applied to the (Billed) Items ? 🧐