How to Record Vendor Payment

Last reviewed: June 9, 2026

On this page

Use this workflow to record a payment to a vendor, apply existing vendor credit, or add a vendor prepayment.

When to use this workflow

Use Record Payment when money is being paid to a vendor for a purchase order or vendor invoice.

Use Apply Credit when the vendor already has available credit and that credit should be applied to a PO or invoice.

Use Add Prepayment when money was paid to the vendor but should remain available as vendor credit until it is applied later.

Do not record a direct PO payment when a vendor invoice already exists for the PO. Pay the invoice instead.

Before you start

Confirm:

The vendor exists in PAX.
The payment is for a PO, an invoice, existing vendor credit, or a new prepayment.
The payment amount and payment date are correct.
The payment method is known.
The reference is available when needed.
Any wire, EFT, or credit card fee is known.
The correct credit card is selected when paying by credit card and card tracking is needed.
Currency, final exchange rate, and vendor amount paid are correct for non-USD payments.
The invoice is not already paid and is not in a pending check run.

Screen paths

Dashboard > Finance > Payables > Vendor Payments
Dashboard > Purchasing > Vendor Payments

Record a PO or invoice payment

Open Vendor Payments.
Search for the vendor in Select Vendor.
Select the exact vendor option.
Select Record Payment.
Choose Purchase Order or Invoice.
Select the PO or invoice.
Review the loaded payment information and balance due.
Enter AP Amount Relieved (USD).
For non-USD payments, review or enter:

Field	Use
`Payment Currency`	Vendor payment currency.
`Final Rate: 1 USD =`	Final payment exchange rate.
`Vendor Amount Paid`	Amount paid in vendor currency.
`Settlement USD`	USD settlement amount calculated from the payment values.
`FX Gain` or `FX Loss`	Realized FX difference shown by PAX when applicable.

Confirm Payment Date.
Select Payment Method.
If Credit Card is selected, choose the card when applicable.
Enter Reference.
Enter the optional fee when the method is Wire Transfer, EFT, or Credit Card.
Review GL Posting Preview.
Review Total Cash Disbursement or Total CC Charge.
Select Record Payment.
Confirm the payment appears in the vendor payment history.

If the selected PO already has a vendor invoice, PAX blocks the PO payment. Switch to Invoice and pay the invoice directly.

Apply vendor credit

Use this when Available Vendor Credit is shown and the existing credit should reduce a PO or invoice balance.

Select the vendor in Vendor Payments.
Select Apply Credit.
Choose whether the credit should be applied to a Purchase Order or Invoice.
Select the PO or invoice.
Review the available credit and target balance.
Select Apply Credit.

Applying credit does not create a new cash or card payment. It links existing available vendor credit to the selected PO or invoice.

If a PO already has a vendor invoice, apply the credit to the invoice instead of the PO.

Add a vendor prepayment

Use this when money has been paid to a vendor and should become available credit for future use.

Select the vendor in Vendor Payments.
Select Add Prepayment.
Enter Prepayment Amount.
Confirm Payment Date.
Select Payment Method.
Enter Reference when available.
Enter an optional fee for wire transfer or EFT payments.
Review GL Posting Preview.
Review Total Cash Disbursement.
Select Record Prepayment.

The prepayment becomes available vendor credit. To pay by credit card, use Record Payment on the vendor's PO or invoice instead of Add Prepayment.

What happens behind the scenes

When Record Payment is selected, PAX:

Validates whether the payment is for a PO or invoice.
Requires a PO for PO payments and an invoice for invoice payments.
Blocks direct PO payment when a non-deleted invoice already exists for the PO.
Stores amount, date, method, reference, fee, card, currency, exchange rate, foreign amount, settlement amount, and realized FX amount when applicable.
Marks PO payments as prepayments when the PO payment terms indicate prepayment.
Records credit card payments through the credit card payable path shown in the preview.
Uses configured payment posting logic for the related accounting entries.

When Apply Credit is selected, PAX:

Uses available unlinked vendor prepayments in first-in, first-out order.
Links credit to the selected PO or invoice.
Splits a prepayment if only part of it is needed.
Leaves any unapplied split remainder available as vendor credit.
Blocks invoice credit application when the invoice is paid, deleted, or in a pending check run.

When Add Prepayment is selected, PAX creates an unlinked vendor prepayment. That prepayment increases available vendor credit for later application.

Troubleshooting

The Record Payment button is disabled

Likely cause: A required PO or invoice has not been selected, the amount is blank, or a PO with an existing invoice is selected.

Safe fix: Select a valid PO or invoice and enter an amount. If the PO has an invoice, pay the invoice directly.

Contact support if: The target record is valid but PAX still blocks payment entry.

PAX warns about overpayment

Likely cause: The payment amount is greater than the current balance due.

Safe fix: Confirm the amount before continuing. If the extra amount should become vendor credit, use the appropriate prepayment or credit process intentionally.

Contact support if: The balance due shown by PAX appears incorrect.

Vendor credit cannot be applied to a PO

Likely cause: The PO already has a vendor invoice.

Safe fix: Apply the credit to the invoice instead.

Contact support if: The PO should not have a vendor invoice or the invoice target is unavailable.

A non-USD payment shows an FX gain or loss

Likely cause: The final payment rate differs from the invoice or PO rate.

Safe fix: Confirm the final rate and vendor amount paid before recording. PAX shows the settlement amount and FX effect in the form.

Contact support if: The rate or calculated FX effect does not match the finance team's expected settlement.