I have made a prepayment of £50 to my supplier A. I have now entered an invoice of supplier A amounting to £60 into the payables system.

1) Could I apply the prepayment amount of £50 against the invoice payment and issue the difference of £10 payment to the supplier?

2) Or to apply a prepayment against an invoice, do we have to have a prepayment account amount at least equal or bigger than the invoice amount to which we intend to apply it to?

If the prepayment is applied to the invoice and there is still some unpaid amount left in the invoice, then the status will change to partially paid. You can pay the rest using other methods or apply more prepayments. If you fully apply the prepayment then the status will change to paid. I will cover the details in the videos.