iX ERP provides several sales scenarios to match any customer workflow, Prepaid sales order is a common practice when customers are paying an advance payment for the project or service and the merchant doesn’t want to issue an invoice for now, as this service is under delivery and cannot be considered a committed revenue yet, also they should not report its taxes yet.
In iX ERP settings, in prepayment terms settings, you will find a term called Prepayment, this term will not be available in the direct invoice sales method.
To create a prepaid order, in the sales order select Prepayment Term from the payment terms in the sales order. Prepayment Order is issued and you can print or send it to the customer by email.
Next step is the customer payment, in the customer payment, the prepaid order will appear and you can receive the customer payment on the desired cash or bank account.
You can issue an invoice in this stage with the paid amount or you can issue the invoice later when the full amount is paid. to issue the invoice for Prepaid Order, we prepared a special screen in the sales module, under Transactions Tab called Invoice against prepaid orders, the invoice that will be created is with the actual paid amount, not the full sales order. In this stage, deferred income is created
Deferred revenue is not yet revenue. It is an amount that was received by the merchant in advance and it is considered liability till it is converted to revenue. The amount unearned (and therefore deferred) as of the date of the financial statements should be reported as a liability. The title of the liability account might be Unearned Revenues or Deferred Revenues.
To convert the prepaid invoiced amount from Deferred Revenue to the Revenue account, Delivery Note is required, this step confirms that customer received the product or service and he accepts the invoice, so the revenue now is confirmed and converted to the revenue account in the GL.
Required Settings:
- Add a Prepayment Term in Payment Terms in Settings => Payment Terms
- Create a Deferred Income Account in the Chart of Accounts under Current Liabilities if one does not exist.
- Set this Deferred Income Account in the Banking and GL Setup under settings.
