It’s nice to see you in the Community, chuck26.

Yes, you can create a bill from a purchase order. When you enter a bill, the inventory count for the products will be affected. To ensure your records are correct, input the entry when you receive the items.

For your other concern, record the prepayment and then apply it to the bill. Then, associate the transaction to Accounts Payable. Allow me to help show the steps to do the process in QBO.

1. Go to the Plus icon or New menu in the upper left corner and select Expense under Vendors.
2. In the Payee field, select a vendor and pick the bank/credit account to credit the expense.
3. Enter the date of purchase in the Expense/Payment date field and specify the payment method for the transaction.
4. In the Accounts section, pick Accounts Payable and key in the amount.
5. Click on Save and close.
   

To link the bill to the prepayment:

1. Tap the Expenses menu on the left panel and choose the Expenses option.
2. This will open the Expense Transactions page.
3. From there, select the bill you’re trying to pay and click the drop-down under the Action column to select Make payment.
4. On the Bill Payment screen, go to the Credits section and tick the box for the prepayment.
   
5. Hit Save and close/Save and new.

However, if you want to bill the transaction to your customer, let me share the Enter billable expenses guide. It outlines the complete instructions to track expenses incurred and steps to apply them to invoices.

I'm also adding a link that can help manage prepaid items. It outlines the complete instructions on how to create a purchase up to linking the bill and check on the Bill Payments page: How to track your prepaid inventory.

Keep me posted if you have any clarifications or concerns. I’ll get back to answer them for you. Enjoy the rest of the day.