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Prepayment Customer Invoice in Dynamics 365 Finance
Introduction
The Prepayment Customer Invoice feature allows users to create and manage invoices for customer prepayments. A request of advance payment by seller to customer for securing a commitment before delivering goods or services. This feature offers flexible payment options and reduce financial risk and enhances customer relationships.
This feature is available in 10.0.41 version.
First, we need to enable Prepayment customer invoice feature in feature management.
Pre-requisites
Posting profile for customer prepayment
- Go to Inventory management> Setup > Posting >
- Sales order> Customer Prepayment.
- Click new and set up the default ledger account for posting
- Click save.
Accounts receivable parameters
- Go to Accounts receivable> Setup > Accounts receivable parameters.
- Click on Updates> Invoice Fast Tab > Prepayment section, Enable the Check mandatory sales order confirmation Checkbox to create a prepayment invoice only if the sales order is confirmed.
- Click on Ledger and sales taxtab > General Fast Tab > Prepayment invoice section > Prepayment application policy field, select one of the following values:
- Notification– when user create the final invoice. If the prepayment isn’t applied, user get a notification
- Automatic– Prepayments are automatically applied to the sales order if full payment is received and settles the prepayment invoice.
- Click on Number sequencestab, set up number sequences for the Prepayment invoice, Prepayment invoice voucher, Prepayment invoice reversal, and Prepayment invoice reversal voucher references as shown below.
Background process for prepayment
- Go to System administration> Setup, Click on Initialize process automations.
- Go to System administration> Setup > Process automation and create the Automated prepayment settlement posting background process.
- Update the interval for the Automated prepayment settlement posting process automation to one minute.
ER configurations for invoice model
If user use electronic reporting (ER), follow these additional steps.
- Go to Electronic reporting in
- Go to Configuration provides, click on Repositories under Microsoft tile as show below.
- Select Dataverse and click Open.
- Import the following files from Dataverse:
-
- Customer prepayment invoice model
-
- Customer prepayment invoice model mapping
- Prepayment invoice template
- In the workspace > Related links> Click on Electronic reporting destination.
- Click New and select Prepayment invoice template in the Reference field
- Under File destination click new and give File component name and name as a customer prepayment invoice.
- Click on Settingsto enable the different destinations for reports.
- Choose destination type and select enabled button as yes and give required data and click OK.
- Select the Convert to PDFcheckbox to print the file in PDF format.
- Go to Accounts receivable> Setup > Accounts receivable parameters.
- Click on Electronic documentstab, select the Prepayment invoice configuration in the dropdown list and save.
PROCESS
Create a prepayment proposal
- Go to Accounts receivables > Orders > All sales orders.
- Create a sales order and confirm.
- Go to Invoice> Prepayment > Payment proposal.
- Select the prepayment type:
- Percentage– If user select Percentage, the Prepayment value field is enabled. This field represents the percentage of the total sales order amount that is required as a prepayment. The Total prepayment amount field shows the calculated prepayment amount.
- Fixed– If user select Fixed, the Total prepayment amount field is enabled, and user need to enter the prepayment amount. The amount can’t exceed the sales order amount.
- In the Sales categoryfield, select the appropriate sales category.
- Click on Save.
Generate prepayment invoice
- Go to Invoice> Prepayment > Prepayment invoice.
- Review the prepayment invoice. The page shows customer invoice account, date, prepayment invoice number, prepayment status, and prepayment amount as shown below.
- After review click on Post.
- The open customer transaction is created, and the status of the prepayment invoice is changed Open to
- Click on Print.
- Customer prepayment invoice report will open in screen as shown below and it can be downloaded.
- Prepayment invoice > view > Voucher.
Settle the prepayment invoice
- When payment for the prepayment is received, the customer payment journal is posted to settle the prepayment invoice amount.
- Once prepayment invoice is settled, the status of the prepayment invoice changes from Pending to Received, and Apply prepaymentis available.
Post the final invoice and apply the prepayment
- Click on Invoice > prepayment > Apply prepayment.
- Select the prepayment line and click on Apply prepayments.
- When user create final invoice the prepayment invoice also included in sales order invoice, the selected prepayment is applied to the invoice when the Automated prepayment settlement postingbackground process is successfully run.
- In voucher transactions we can find reversal entries for prepayment once the Automated prepayment settlement posting background process is completed.
- The remaining amount of the sales order invoice can be settled through a customer payment journal and shows the outstanding amount as shown below.
Conclusion:
The Prepayment Customer Invoice feature streamlines the handling of customer prepayments, offering robust tools to enhance financial security and operational efficiency. By automating key processes and providing flexible configurations, businesses can reduce risks while improving cash flow and customer satisfaction. With its seamless integration into Dynamics 365 Finance, this feature becomes a critical asset for organizations aiming to maintain strong financial practices and foster trust with their customers.
We hope this blog has offered valuable insights and practical advice for your professional journey. If you found it beneficial, please consider sharing it with your network. We welcome your feedback and thoughts, so don’t hesitate to contact us directly. Thank you for reading, and we look forward to engaging with you further!
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