Payment date is earlier than bill date

[leihu]

Dear Experts,

I received a bill from a supplier, but the date on the bill is later than the date I paid.

I initially just used pay bill to pay the bill as normal regardless of the early payment. But then a friend told me this is not the right way, because Payables Reconciliation report will display Out of Balance Amount. She let me create a bank account (begin with 1) called prepayment, transfer the amount from the bank account to it on the payment date, and then pay the bill from the prepayment account on the bill date. I think this is very clear, logically.

But later, I read an article on MYOB help (https://help.myob.com/wiki/display/ar/Supplier+prepayments), which solves exactly the same problem. It first creates a purchase with 0 dollar, and then pay it with the real bill amount, which results in a debit memo. Finally it applies the debit to the real bill from the supplier. It looks ok, but from the screenshots I found it uses the same date, which doesn't make sense to me. I think the first dummy bill (with 0 amount) should be on the payment date. Is that right?

Can anyone explain this to me? Which way should I use to enter such bills. Or you guys have a better, official way?

Thanks in advance!!

[Tracey_H · Accepted solution]

Hi @leihu 

Thanks for your post. Your friends suggestion uses a clearing account (the prepayment account) which is one way to handle prepayments. We recommend using the method in that help article as it links the prepayment to the supplier so there is payment history. 

The dates in the screenshots of the help article are just because the examples were recorded on the same day. When recording the bill and payment in step 1 you would enter the date as the date you made the prepayment. Then enter the actual bill with the invoice date and apply the debit note.

Please let me know if you need further help.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

[leihu]

Hi Tracey,

You've just solved one question for me only a few days ago, and you solve another one again. You not only tell how to do things, but also why. I really appreciate your expertise and time. Thank you very much indeed.

Just last night, I found another solution (not sure it's a solution or not). That is,

(1) create a purchase order

(2) pay the order on the date when the transaction happens on bank statement (earlier than bill)

(3) finally when I receive the bill from supplier, change to order to bill.

I found the method is quite similar to the one from my friend, because when I pay the order, MYOB transfer the amount from the bank account to another account named "Deposits to Suppliers" (equivant to the prepayment account she let me create). And when I change to bill, MYOB pay the bill from the deposits account. The only difference is that with my friend's method I need to transfer the money manually, but with the purchase order methods, MYOB does that for me.

Also, compared to the $0 sales methods, I like this method. Because with $0 sales I need to create an extra purchase each time this situation happens (and that payment is earlier than bill is quite often), but with purchase order no extra purchase is needed.

As always, I want a suggestion from experts like you. Thanks again!!

[Tracey_H]

Hi @leihu 

Thank you for those very nice words, I'm really glad that I've been able to help you.

Purchase orders is another way to handle this. The only thing with using this method is that it is more complicated if you need to delete a payment or order. This help article, Supplier Deposits, has detailed information that you may find useful.

There might also be accounting implications as it's a prepayment not a deposit so you might want to check that with your accountant.

Please don't hesitate to post again if you need further help.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

[leihu]

@Tracey_H Thanks a million, you’re amazing!