An On Account Payment is one with no Purchase Invoice Number and with no Prepayment Number. It is possible to connect an On Account Payment to a subsequent Purchase Invoice, but you cannot use the 'Connect to Prepayment' function. Instead, you should first enter and approve the Purchase Invoice without reference to the On Account Payment. You must then register that it has been paid by the On Account Payment. You can do this in a Payment record as a two-step process:

In order to update the Purchase Ledger correctly, you must enter the payment information twice as shown above; first as a normal row, and then with a negative sign as an On Account Payment. The example illustration below shows that an On Account Payment of 1,000 has been issued, which has been partially used up by an Invoice for 164.50.

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