From time to time I have had clients that use Order Entry ask, “How can we send an invoice to a customer for a prepayment”.  This is not a simple “out of the box” solution.  The problem is that since the sales order is entered, adding another invoice in AR not only causes the potential for incorrectly adding to Sales, but then to fix it, once the sales order is shipped and invoiced, the prepayment invoice in AR invoice needs to be credited.  As a result, usually the only option is to manually create a “fake” invoice and send it to the customer.  The obvious problem with this is that you don’t have any record of the invoice in Sage.

Below is a method that will resolve this dilemma:

  • Create an AR invoice (summary) for the amount you are invoicing the customer and send the invoice to the customer
      • In the invoice distribution, charge it to a prepaid liability account.

  • In OE, go to OE Setup/Miscellaneous Charges and create a new miscellaneous charge (i.e. Prepay – prepayment). For the Misc Charge revenue account use the same prepaid liability account you used for the AR invoice.

  • After the A/R invoice is posted, go into the order that the advanced billing is for.
  • Insert a new line. Change the line type to Miscellaneous and select the new miscellaneous charge.
    • Insert a new line item for miscellaneous – Select your new misc. charge and enter a NEGATIVE Amount for the misc. charge (Sage will allow you to do this as long as the total of the order is not negative).

With this method, when the customer pays you for the AR advanced invoiced, you can apply it to the AR invoice.  When you ship and invoice the order, it will now show the full cost of the line items you are billing AND will include the misc. negative charge representing the amount you already billed in AR thereby deducting it from the total invoice amount in AR which is the remaining balance after the prepayment that should be paid.

Furthermore, this will not adversely affect your General Ledger.  The AR invoice will credit the prepaid liability account and debit AR, but the misc. negative charge from OE will offset the prepaid liability.  The total actual sales from the items in the order will be in sales, but the net amount of sales, less prepayment will be in AR.

Tagged: Tips and Tricks
SOS
vitoevko
Consultant · SOS Consulting Services
The SOS team brings decades of ERP implementation experience across Acumatica, Sage Intacct, Sage 300, and Sage HRMS.
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