On Account Payments
You can use On Account Payments when you issue payments to Suppliers without reference to specific Invoices (usually before you have received the Invoices). You can enter these payments to the Payment register without specifying a Purchase Invoice Number on flip A:
In the Customer records for every Supplier to whom you are likely to pay deposits, switch on the On Account check box on the
'Terms' card. Then specify the separate control or suspense Account number in the
Account Usage P/L setting, using the On Account A/C field. In the example illustration below, the special Account for on account Suppliers is 755 since raising a Prepayment creates an asset. The Nominal Ledger Transaction generated when the Payment is approved and saved will debit the Sent Value to this Account. The Credit Account is taken from the Payment Mode as usual:
You can then connect the On Account Payment to a subsequent Purchase Invoice, to remove it from your Purchase and Nominal Ledgers. First enter and approve the Purchase Invoice as normal without reference to the On Account Payment. You must then register that the Purchase Invoice has been paid by the On Account Payment. You can do this in a Payment record as a two-step process:
In order to update the Purchase Ledger correctly, you must enter the payment information twice as shown above; first as a normal row, and then with a negative sign as an On Account Payment. The example Periodic Supplier Statement below shows how the Purchase Invoice for 164.50 has been paid by the earlier On Account Payment of 1,000. The remainder of the On Account Payment is outstanding:
In the Nominal Ledger, the Purchase Invoice is removed from the Creditor Account, and the balance of the On Account A/C is reduced by the value of the Purchase Invoice:
