What is a Purchase Prepayment in Business Central?

An advance payment made to a vendor before goods or services are delivered, tracked against the purchase order in BC.

Purchase Prepayments in Business Central allow you to invoice and pay a vendor in advance — before the goods or services on a purchase order are delivered. This is common for custom orders, imports, or when working with new vendors who require payment upfront.

Prepayments are configured as a percentage or fixed amount on the purchase order. When you post a prepayment invoice, BC records the advance payment against a prepayment GL account (a balance sheet account), not directly to expense. The cost is only recognized when the final invoice is posted.

When the final purchase invoice is created, BC automatically deducts the prepayment amount, so the vendor only receives the remaining balance. This ensures clean accounting and prevents double payment, while maintaining a clear audit trail of the prepayment lifecycle.

Related terms

• Purchase Order — A formal document sent to a vendor to order goods or services, with agreed quantities, prices, and delivery terms.
• Payment Terms — Codes defining when and how vendor invoices must be paid, such as Net 30 or 2/10 Net 30, configured on vendor cards.
• Vendor Ledger Entry — The detailed transaction log in BC recording every financial event related to a vendor — invoices, payments, and credit memos.
• General Ledger — The core accounting record in Business Central where all financial transactions are ultimately posted and stored.

How Zentriq helps

Zentriq's AI tools automate many of the manual processes around purchase prepayment in Business Central. Learn about the Zentriq Agent or try Zentriq PunchOut to see how AI simplifies procurement in BC.