What are Pre-Payments in Xero and how do I handle them?

Applies to: Xero 

If you would prefer to watch a video on how to handle your prepayments, watch the following Webinar:

Wise-Pay Best Practices - Prepayments

Wise-Pay pre-payments occur when we receive money from a client but do not have an invoice to match the payment. When this happens, Wise-Pay will automatically create a prepayment in Xero for this amount against the nominated bank account.

How are Prepayments posted in Xero?

The Wise-Pay Prepayment account is a Current Liability Account:

It will appear in your Bank Account Transactions as a Prepayment - Unreconciled:

And on the Dashboard against Wise-Pay Prepayments:



What do I do?

Locate the client in Xero

You will need to locate the client in Xero, and verify if the Invoice has now, subsequently been received for payment:


 Allocate Credit to Invoice 


The Wise-Pay Prepayment account should balance to $0.00. To ensure that a client's payments are applied appropriately, we should be aiming for the Prepayment account to return to $0.00 as quickly as possible.


 Reconcile the payment in the Bank Statement 
When the Payrix Batch Payment is received to your bank account, it will generally be a total of both Prepayments and Wise-Pay Clearing transactions.

Here's how to do it:

  1. Select: "Find & Match" and search for PP_

    Note: The total amount is not likely to equal the amount received from Payrix.

  2. Select the Prepayment Transaction


  3. Add a new transaction for the remaining amount as a direct payment


    Note: Once this transaction has been saved, the total amount received should match with the transactions for prepayment and Wise-Pay Clearing - you should be able to complete the reconciliation.

  4. Complete the Reconciliation


    The original Account Transaction will now be showing as reconciled.



Prepayments should not be processed in the same way as Overpayments. Read more about overpayments at What are Overpayments in Xero.

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