Prepayments - Customer has paid an Invoice before it has been Synced.
When a customer pays before you sync, the amount will be received. If the payment is processed - and the invoice does not exist in Xero, a Prepayment invoice will be created in Xero that can be applied to the invoice when it is eventually synced.
The PPs appear as a record in the AR and are applied in much the same way as a Credit Note is.
When you sync a Pre Payment it will be treated as a standard payment when syncing to CW.
Funds for this prepayment should not go to your Clearing Account.
Prepayment settlements are set to go directly to your Bank Account and the invoice transactions to your Deferred Revenue account. Deferred revenue is not yet revenue. It is an amount that you have received in advance of earning it.
The amount unearned (and therefore deferred) as of the date of the financial statement should be reported as a liability. The title of the liability account might be Unearned Revenue or Deferred Revenue or Income in Advance.
The recipient of a prepayment records unearned revenue as a liability on the balance sheet. This is because it refers to revenue that has not yet been earned, but represents products or services that are owed to a customer. As the product or service is delivered over time, it is recognised as revenue on the income statement.
We recommend that your create a separate revenue account for Wise-Pay Prepayments and place it on the "Watch List" so that you can keep tabs on it. This will also help to separate other down payments you may be receiving.Bank Transaction (IP Deposit - from Integrapay) will require reconciliation against any pre-payment first, then manually reconcile any other payments that would be included with that deposit.
When it comes to Prepayments - the recommendation is:
1. Set up a Liability Account
2. Go to Wise Pay Account Merchant Details- Change Account to newly created Prepayments liability account going forward.
2. Instead of Income in Advance - Name it -Wise-Pay Prepayments This will also help to separate other down payments you may be receiving.
3. Place on Watch List
4. Remember to sync frequently, as this will help create less Prepayments.