Recording a supplier advance

Effectively managing advance payments to suppliers is a key aspect of financial management, ensuring that your accounts are accurate and up-to-date. This guide provides a step-by-step approach for recording advance payments to suppliers in Wafeq, from the initial payment setup to applying these payments to future supplier bills.

Expanding on this, we also cover the intricacies of including tax considerations and managing bank fees associated with these transactions. Following these detailed instructions can streamline your payment processes, maintain accurate financial records, and ensure compliance with tax regulations.

When you want to make an advance payment to the supplier before they dispatch the goods or provide the service, you can create an advance payment to the supplier.
 

A new supplier advance will appear, Fill in the details as follows:

• On the left side menu, go to Supplier Payments.

  

• Click on Click on the "arrow" next to “Record Supplier Payment”, then select “Record Supplier Advance”.
• Select your "Supplier" in the dropdown.
• In the "Paid Through" dropdown, select the bank account where you made the payment. The payment currency will automatically be selected as the bank account's currency.
• Select the "Payment currency" for this supplier.
• In the "Amount paid", enter the amount you pay from your supplier in your bank account.
• Under the “Other Information” section, you can optionally link this payment to a project, branch, or cost center, or add a reference.
  This helps streamline tracking and ensures suppliers are properly linked, making your workflow more efficient.
• Click "Save".

Here's an example of a Supplier advance:

Applying the advance to a supplier bills

When you create a supplier advance payment, Wafeq will automatically create a Debit Note for the supplier. You can find the Debit note by going to Debit Notes in the left-side menu.

You can then apply the debit note discount to a bill.

Here's an example of a debit note created from supplier bills:

How to Record an Advance Payment to a Supplier with Tax

Step 1: Set Up a Supplier Prepayments Account

First, create a "current assets" account named "Supplier Prepayments" to track the prepayment. This helps in monitoring advance payments distinctly from other financial activities.

Step 2: Record the Advance Payment

• Navigate to the "cash expense" option in the side menu, either upload the invoice or fill it in manually.

  

• Select the "Supplier Prepayments" account in the "Paid through".
• Choose the bank account you're paying from in the "Paid Through field".
• Enter the prepayment amount in the "Amount field".
• Apply the appropriate tax rate, deciding between inclusive or exclusive tax models in the "Tax rate".
• Select the "project" to link this payment and supplier to a specific project, making your work easier and more organized. The same applies to the branch and cost center; these are optional.
• Click "Save".

Step 3: Generate the Final Bill

When creating the final bill:

• List all "purchased" items as usual.
• Add a line item named "Prepayment / Advance Payment" on Bill No. [reference] with a negative amount to reflect the "advance payment".
• Input the "tax amount" from the "advance payment" and assign it to the Supplier Prepayments account.

Note: Ensure the "tax model" matches the initial cash expense for consistency.

Handling Bank Fees

•  If bank fees are included with the advance payment on your statement, adjust during bank reconciliation by booking the difference to a "Bank Fees" account.
• For separate bank fees, record them through a manual journal entry or directly on the bank transactions page, allocating them to the "Bank Fees" account.
   
   

How to Export Supplier Payments

To export "Supplier payments" data, click on the three-dot menu located on the side of the screen, then select your preferred export format such as Excel or CSV. You can also save the data for future use or copy and paste it wherever needed.