Add a prepayment

Enter a prepayment in your bank account as a spend money or receive money transaction. A prepayment shows in your bank account before you invoice your customer or your supplier bills you.

Xero does not offer multi-currency for prepayments. You can only add prepayments in bank accounts that are in your base currency.

To add a prepayment in your bank account:

  1. Go to Accounts, then select Bank Accounts.

  2. Select the bank account and click Manage Account.

  3. Select Receive Money or Spend Money

  4. Next to Received as or Spent as, select Prepayment.

    Prepayment option in Recieved as menu

  5. Enter transaction details:

    • From/To, Date, Invoice #, Reference

      Enter the relevant details. Receive money prepayments receive invoice numbers in line with sales invoices.

    • Amounts are (tax)

      To set the tax calculation in the transaction, select either:

      • No Tax - The transaction total will have no tax.
      • Tax Exclusive - For each item entered, the line item amount does not include tax. Tax is calculated on top of the subtotal and shown separately.
      • Tax Inclusive - Tax is included in the amount for each line item.
    • Description, Quantity, Unit Price

      Enter the relevant details.

      Description, Quantity, Unit Price fields

      You can enter negative as well as positive amounts in the Unit Price column if needed, as long as the total is a positive amount.

    • Account, Tax Rate

      Select the account to assign the line item and change the tax rate if needed.

    • (Optional) Add branding and tracking to a prepayment.

      If you use branding themes or tracking, you can add these when you enter prepayment details.

    • Branding (prepayments received)

      For prepayments received, select a branding theme to determine how the prepayment will appear in PDF format. You can choose from the same branding options as sales invoices.

      If you have more than one branding theme, you can choose which branding theme to apply. You might want to add one that is specifically related to prepayments received.

      Unlike invoices, prepayment PDFs will not show:

      • Payments
      • Allocations
      • Terms & Payment advice
      • Remittance advice
      • PayPal payment link
    • Tracking

      If your organization uses tracking, options will display. If you want to track this transaction, choose the required option.

      Set up tracking categories to monitor different areas of your business

  6. Click Save.