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Don’t use Prepayments in Sage 50

When working with customer prepayments in Sage 50, it’s important to choose a method that balances accounting accuracy with future flexibility. While the software allows users to mark transactions as Prepaid, this approach has a major caveat: once saved, prepaid transactions are locked from further edits. This limitation can create workflow bottlenecks if corrections are needed later.

Why You Should Avoid the “Prepaid” Option

Marking a customer invoices as prepaid may seem like a quick solution for deposits or early payments, but:

  • The transaction becomes non-editable after saving.
  • You cannot reassign or link the payment to an invoice later.
  • Any corrections require deleting then transaction and re-entering.
  • May causes problems if you need to perform the data integrity check utilities.

Recommended Approach: Credit Memos + Sales Invoice

A more flexible and auditable method is to use Credit Memos in tandem with a Sales Invoice. Here’s how it works:

  1. Create a Credit Memo:
    • Enter the prepayment as a credit memo under the customer’s account.
    • This creates an open credit balance that can be reviewed and adjusted later if necessary.
  2. Apply the Credit Memo via Receive Money:
  • When the invoice is ready, match the credit memo with the credit memo in the Receive Money Window.
  • This links the prepayment (credit memo) directly to the customer’s open invoice.

Benefits of This Method

  • Both transactions remain editable, providing greater flexibility.
  • You maintain a cleaner audit trail with clear application of funds.
  • Helps avoid the need to void and re-enter transactions—saving time and reducing errors.