https://help-sage100.na.sage.com/2021/index.htm#cshid=45022&chm=AP 

I had tried this in our test company but I'm not sure I'm doing it right because to set up the prepayment, I debited the deposit account and credited cash.  The entry shows up as an invoice in the AP system.  When I record an invoice, I debit the expense and credit the deposit account.  This entry also shows up as an invoice in the AP system.  On the GL, it is doing what I want as far as reducing the deposit account but the vendor balance does not appear to be reducing.

In AP enter your Invoice and post to the Deposit GL Account (Debit Deposit Account/Credit AP).  When you cut your check or record payment via Manual Check it will "pay off the invoice. 

You can also do this in one step in Manual Check which will record the invoice and pay it at the same time, posting to the Deposit Account (Debit Deposit/Credit Cash; zero balance on the invoice). 

Then when you get the vendor invoice, enter in AP Invoice Data Entry, and select the paid, prepaid invoice on the header.   

Procedure slightly different for Purchase Order Involved Transactions. 

In AP enter your Invoice and post to the Deposit GL Account (Debit Deposit Account/Credit AP).  When you cut your check or record payment via Manual Check it will "pay off the invoice. 

You can also do this in one step in Manual Check which will record the invoice and pay it at the same time, posting to the Deposit Account (Debit Deposit/Credit Cash; zero balance on the invoice). 

Then when you get the vendor invoice, enter in AP Invoice Data Entry, and select the paid, prepaid invoice on the header.   

Procedure slightly different for Purchase Order Involved Transactions. 

I have this same question, except mine involves a PO.

Process is the same.  However, when you enter your AP Invoice to post to the Vendor Deposit Account (Prepaid Vendor); you then go to the Purchase Order and on the Total Tab, you enter the amount prepaid with the Check Number.  Later when the vendor invoice is received, you do a PO Receipt of Invoice for the full amount of the PO.  That will clear the vendor deposit account and post any balance to AP (if the amount is the exact amount of your prepayment, then it posts a paid invoice to AP).  If the amount is different it puts the balance in AP for payment later. 

Thank you. I'll try that.