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evinna
May 27, 2025
Question

Inventory and purchase order to suppliers - how to manage prepayment to supplier and have the inventory stock updated only after receipt of stock?

  • May 27, 2025
  • 1 reply
  • 1 view

I encountered an issue with PO and inventory quantity update. How to create a bill and pay a bill from PO WITHOUT updating the inventory quantity? We have to prepay our supplier PO before they ship the products to us, therefore from our bank, there is deduction of payment, so we create the bill from the PO, and pay the bill. However by doing so, it will also update the inventory qty even when we have not receive the products. Do you have any advice on how we can solve this issue? If we don't create the bill from PO, and only do a journal entry CR Bank, then if by the time we receive the physical inventory and decide to create the bill, wouldn't it have a double deduction of payment from our bank account? could you kindly assist

1 reply

A
ArielI
May 27, 2025

We can write checks to your supplier and track them using another current asset account to record prepayments for future goods or services, Evinna. I'd be glad to guide you in detail below.

 

To begin with, let's create a new account by following these steps:

 

  1. Click on the Gear icon in the top right corner of your screen.
  2. Select Chart of accounts.
  3. Click on New button.
  4. Choose the Current assets in the Account type, then pick Other current assets (OCA) in the Detail type.
  5. Complete the necessary fields and select Save.

 

Then, you'll need create a check on it.

 

  1. Click on the +New button.
  2. Select Cheque from the options.
  3. Enter the details for the check.
  4. Choose the OCA account you just created in the Category details.

 

Once done, convert the Purchase order (PO) to a Bill by the moment you actually received it. Also, ensure that you enter the OCA account in the Category details section with a negative value. This will reduce the asset account to match the amount you owe after the prepayment. If you still have outstanding bill balance, just pay it accordingly.

 

Another way to record payments without affecting inventory quantities is to refer to this article: How to track Prepaid Inventory. While this article is based in the U.S., the information is still relevant and applicable to users in Singapore.

 

You can also run reports to check the status of your inventory and see how much stock you have on hand and help identify any potential shortage.

 

Have you successfully completed the steps I provided above? If you have further questions or clarifications, please feel free to click the Reply button and we'll respond to you as soon as possible.

E
evinnaAuthor
May 28, 2025

Hi Ariell

Thank you for your advice.  However, we are pre-paying the supplier via bank transfer mode, therefore do we still select Cheque option under +NEW button?

C
CamelleT
May 28, 2025

Yes, you need to select the Cheque option, Evinna.

 

If you create a cheque, it will allow you to record your prepaid inventory and apply it to the bill once you receive the physical inventory from your supplier.

 

You can refer to this article for further guidance on how to accurately record payments to your vendor without affecting the inventory quantity on hand until you receive the items. Please know that while this resource is US-based, the same principles apply to Singapore: How to track prepaid inventory.

 

I've included this article to provide you with helpful insights on the products you buy and sell, as well as the status of your inventory: Use reports to see your sales and inventory status in QuickBooks Online (QBO).

 

Feel free to revisit this thread if you have additional questions. 

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