Pre-Payment/Deposit to Vendor

In certain scenarios, it may be necessary to pay a vendor prior to receiving a bill for the product or service they provide.

Examples:

  • Rent payments are typically due on the 1st of the month but the check needs to printed prior to that date in order for the landlord to receive the payment on time.
  • An order has been placed for an inventory purchase and the vendor requires a deposit before delivery.

Either option listed below will work for either of the above scenarios.

Option 1: Create an AP voucher to record the prepayment

This option is preferred if you want everything to flow through A/P Aging. However, you are not required to send this through A/P if you want to use a different payment type.

  1. Create a new Voucher:
    1. Voucher Amount: enter the prepayment amount.
    2. Voucher/Post Date: enter the date when you want to recognize the prepaid expense (NOT the actual expense). Using this method, you can recognize the prepaid expense and print the check on different dates which can be helpful for cash flow planning.
    3. General Ledger tab: enter the prepaid expense account or other G/L account(s) as desired (or as instructed by your accountant!)
    4. Payment Type: if you want to keep the history in A/P Aging use one of the default "AP" payment types. If you don't want to run the payment through A/P, you can choose an alternate payment type such as credit card, ACH, wire transfer, etc.
  2. Post the voucher.
  3. Process the payment:
    1. If you used of the default "AP" payment types, process the payment prior to the due date using the Make Payments process.
    2. If you used an alternate payment type, then there's nothing else that needs to be done to record the payment for the prepaid expense.
  4. When it's time to recognize the actual expense, enter a journal entry to relieve the prepaid expense and record the actual expense in the month in which it is incurred.
    1. Using the example below, we would enter a journal entry dated 6/1/26 to debit Rent Expense and credit Prepaid Expenses.
    2. If the prepayment was a deposit for inventory received via PO, you'll need to enter another Voucher to clear the PO Line Item(s). At the same time, you can also reverse the prepaid expense via the General Ledger tab.
Voucher example

Option 2: Create a quick check to record the prepayment

The primary benefit of using a Quick Check is just as the name implies, it is quick. This option is ideal if you need to print a physical check but you don't need to run the payment through A/P.

  1. Create a new Quick Check:
    1. Check Date: enter the date when you want to recognize the prepaid expense (NOT the actual expense).
    2. GL Account: enter the name or code of the GL Account and the amount.
  2. Print and post the check.
  3. When it's time to recognize the actual expense, enter a journal entry to relieve the prepaid expense and record the actual expense in the month in which it is incurred.
    1. Using the example below, we would enter a journal entry dated 6/1/26 to debit Rent Expense and credit Prepaid Expenses.
    2. If the prepayment was a deposit for inventory received via PO, you'll need to enter another Voucher to clear the PO Line Item(s). At the same time, you can also reverse the prepaid expense via the General Ledger tab.
Quick Check example