Recording vendor advances
Pay a vendor in advance and track the credit for future purchases.
A vendor advance is money you pay to a supplier before receiving an invoice or goods. Recording a vendor advance creates a credit balance on the vendor's account that can be applied to bills as goods arrive.
Before you start
- The vendor must exist in your Contacts. Create them first if needed.
- You need permission to record payments. Contact your admin if the payments page is not available.
- Know the payment amount and currency (if applicable).
- Decide which account to pay from (usually Cash or a Bank account).
Steps
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Go to Payments → New Payment
Open in Usystems -
Choose Payment type: Advance.
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In the Contact field, select the vendor name.
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Enter the Amount to prepay.
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Choose the Currency if needed (defaults to the vendor's preferred currency).
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Select the Account to pay from (this records the credit side of the payment).
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Add a Note if helpful (e.g., "Prepayment for Q3 stock").
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Click Save.
The vendor advance now shows as a credit balance on the vendor's account. When you receive a bill from the vendor, you can apply this advance to reduce what you owe.
Accounting impact
When you record a vendor advance:
- The payment account (usually Cash or Bank) is credited (money out).
- A Vendor Advance Receivable or prepaid asset account is debited (credit from vendor).
When you later apply the advance to a bill, the prepaid asset is credited and the bill's payable is debited, clearing the advance.
Tips & common mistakes
- Only pay trusted vendors in advance: prepayments reduce your immediate leverage if the vendor fails to deliver.
- Keep multiple advances separate: if you make multiple prepayments to one vendor at different times or in different currencies, record each separately.
- Match the advance account type: use an account that correctly reflects the prepaid nature of the payment (not your primary operating expense account).
- Verify currency stability: if paying in a foreign currency, confirm exchange rates and vendor payment terms before recording.
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