Apply a vendor deposit to a bill

When you pay a supplier before the goods arrive, that money sits on a vendor deposit. It stays there until the supplier bills you — then you apply the deposit to the bill, and the bill's outstanding amount drops by what you already paid.

A deposit does not have to be used all at once. If your supplier bills one shipment at a time, you can apply part of the balance to each bill as it arrives and keep the rest for the bills still to come.

A prepayment is a deposit, not a bill

If a supplier sends you an invoice for a percentage — "20% due on order approval" — record it as a vendor deposit, not a purchase invoice. The deposit is the record of that prepayment: it carries the supplier's invoice number, its date, and the PDF itself on the Attachments tab. Purchase invoices are for goods, priced by quantity, so a percentage prepayment recorded as one would double-count the order. See Manage vendor deposits for recording the prepayment in the first place.

Before you begin

• The deposit must be paid — you can only apply money you have actually sent.
• There must be a supplier bill with something still outstanding, for the same supplier.
• If the deposit is tied to a purchase order, the bill must belong to that same order.

Apply a deposit to a bill

1. Go to Orders → Vendor Deposits and open the deposit you want to use.

   The header shows Deposit Amount, Amount Paid, Applied, and Available Balance. The available balance is what you have left to put against a bill.

2. Choose Apply to Bill.

3. In Purchase Invoice, pick the bill you want to net the deposit against.

   Only bills for this supplier that still have an outstanding amount appear in the list. Each one shows how much is outstanding, so you can tell them apart.

4. Check the Amount to Apply.

   SKU.io fills in as much of the available balance as the bill can absorb. You can change it. Type a smaller number when the bill covers only part of the order — the balance you don't use stays on the deposit.

5. Choose Apply Deposit.

The bill's outstanding amount drops by what you applied. The deposit moves to Partially Applied if there's a balance left, or Applied once it's fully used.

Apply part of a deposit at a time

This is the normal shape on staged payment terms. Say you order $40,000 of stock on 20 / 40 / 40 terms and pay the $8,000 approval deposit up front. The supplier then ships in two halves and bills $20,000 for the first one.

That first bill is half the order, so half the deposit belongs to it:

	Amount
Order total	$40,000
Deposit paid on approval	$8,000
First bill (half the order)	$20,000
Deposit applied to that bill	$4,000
Deposit still available	$4,000

Enter 4000 as the amount to apply and the remaining $4,000 waits on the deposit for the second shipment's bill.

If you apply too much, or apply to the wrong bill, open the bill and choose Unapply next to the application on its Vendor Deposits section. The balance returns to the deposit and you can apply it again.

Let it happen automatically

Applying by hand on every bill gets tedious. The deposit's Application Settings, on the deposit's Overview, decide what happens on their own. Choose Edit to change them.

Auto-apply to new bills controls whether the balance is applied automatically when a new bill is raised against the purchase order.

Setting	What happens
Use default	Follows the supplier's setting, then your account-wide setting. The current result is shown underneath.
On	The balance is applied automatically as bills arrive.
Off	Nothing is applied until you do it yourself.

Apply proportionally on partial bills is the one that matters on staged terms. With it on, each automatic application is limited to that bill's share of the order — bill total ÷ order total × the deposit. In the example above, that produces the same $4,000 on its own.

With it off, an automatic application takes as much as the bill can absorb. A first bill covering one shipment would consume the entire deposit, and you would have to unapply and reapply by hand to correct it.

note

Both settings stay editable after a deposit is approved and paid, because they govern how the remaining balance is applied to future bills. Turn proportional apply on before the first bill is raised and you never have to correct an application afterwards.

Next steps

• Manage vendor deposits — recording prepayments and the deposit views
• Vendor deposits on a purchase order — payment-term milestones and what triggers them
• Track & pay purchase invoices — paying what's left after the deposit is applied

Video transcript

Pay a supplier before the goods arrive and that money has to live somewhere.

It waits on a vendor deposit until the invoice turns up.

Open Orders, then head down to the list, to see every prepayment and how much of each is still spare.

Open the one you want to use.

The header carries the three numbers that matter: what you paid, what has been used so far, and the balance still available.

Eight thousand dollars here, completely untouched.

Next you need something to put it against.

Choose Apply to Bill, and pick your invoice.

The list offers only unpaid ones from this same supplier, each showing what it still owes.

Choose it, and an amount fills itself in — as much of the balance as this invoice could swallow.

That figure is yours to overwrite.

This one covers half the order, so it should only take half the deposit.

Type four thousand.

Whatever you leave behind stays put, waiting for the invoices still to come.

Apply it, and both sides move at once.

The invoice drops by four thousand.

The deposit now reads partly applied, with the remainder held back for whatever arrives next.

Doing that by hand every time gets old.

Two settings can make the decision for themselves.

Auto-apply reaches for the balance the moment a new bill lands.

Applying proportionally caps each one at its share of the order — so a single shipment can never run off with the whole prepayment.