Table of Contents

Prepayment Invoices

Polish VAT regulations require the company to issue a prepayment invoice for any prepayments the customer has paid for the sales orders delivered. In the Business Central system, prepayment invoices are issued and posted using the prepayment invoice functionality. Polish Localization extends the standard functionality of advance invoices in terms of adapting it to the requirements of Polish law.

Basic Setup for Prepament Invoices

The functionality extension designed for handling sales credit memos that has been added within Polish Localization includes, among others, the obligation to provide reasons for correction. This requirement also covers prepayment credit memos. Because prepayment credit memos are used only for reversing all posted prepayment invoices issued for a sales order, the reason for correction is always the same. To avoid multiple entering of the same reason for each sales prepayment credit memo, the program automatically enters a default reason code for each sales prepayment credit memo into a field which was added for this purpose. To define this setting, complete the following steps:

  1. Choose Lightbulb that opens the Tell Me feature icon, enter the Sales & Receivables Setup and select the related link.

  2. On the Sales & Receivables Setup page, on the General FastTab in the Prepayment Corr. Reason Code field select one of the previously defined payment correction reasons.

Sales and Purchase Order Invoicing

Issuing a Prepayment Invoice

Most of the functions described is available both in the sales and purchases area, excluding specific modifications of the process of issuing sales prepayment invoices.

To issue a sales prepayment invoice:

  1. Choose Lightbulb that opens the Tell Me feature icon, enter the Sales Orders.

  2. On the Sales Order page, select a sales order and open it in the editing mode by selecting the Edit button. Note, that the Status field should contain the Open option.

  3. On the Prepayment FastTab properly fill in the fields:

    • Prepayment (%) – Based on a percentage value entered in this field, the system calculates suggested prepayment amount based on the sales order value. The prepayment amount is calculated separately for each order line.

      Tip

      The Prepayment (%) field can be filled in automatically with a correct value if it is entered in the customer (vendor) card in the** Prepayment %** field on the Invoicing FastTab.

    • Compress Prepayment – Insert a check mark in this field to link prepayments in the sales order lines provided that the following conditions are met:

      • use the same G/L account to manage prepayments (which was selected in the Sales Prepayments Account field in the General Posting Setup window for combination codes of general posting groups used in order lines);
      • have the same dimensions.

      This field should be empty, if prepayment invoice lines values are to correspond to sales order lines.

    • Prepmt. Payment Terms Code – In the drop-down list in this field select prepayment terms which will be used to calculate a prepayment due date.

    • Prepayment Due Date – Specifies the date when the customer should pay a calculated prepayment amount. This date is calculated based on conditions selected in the Prepmt. Payment Terms Code field.

    • Prepmt. Payment Discount % – Enter a percentage value of a discount which will be granted if the prepayment due is paid until the date entered in the Prepmt. Pmt. Discount Date field. This field is filled in automatically based on settings defined for payment terms which were selected in the Prepmt. Payment Terms Code field.

    • Prepmt. Pmt. Discount Date - Specify the end date of the period until which date the vendor should pay the prepayment due to receive a payment discount. This field is filled in automatically based on settings defined for payment terms which were selected in the Prepmt. Payment Terms Code field.

    Important

    In a purchase order, enter a correct document number in one of the two fields depending whether you are posting a prepayment invoice or prepayment credit memo: Vendor Invoice No on the General FastTab (the number of a prepayment invoice issued by a vendor) and Vendor Cr. Memo No. on the Prepayment FastTab (the number of a prepayment credit memos issued by a vendor).

  4. After you fill prepayment information in the order card, select Order and then Statistics. In the Sales Order Statistics window that opens verify the amounts calculated by the system that are displayed on the Prepayment tab.

  5. If required, you can manually change the amount suggested in the Prepmt. Amt. incl. VAT window. Based on this new amount, the system calculates and changes the amount in the Prepmt. Amount excl. VAT field.

    Important

    Due to modifications within the prepayment invoice functionality implemented in Polish Localization , only a gross amount of a suggested prepayment can be changed in the Sales Order Statistics window, regardless of the setup in the VAT Prices field. The possibility of changing the net amount has been disabled. In addition, the algorithm used to allocate a part of the prepayment amount to sales order lines has been modified: now the system calculates the proportion based on the gross amount in the sales order amount.

  6. A prepayment amount can be printed before it is issued as a test. To do this, on the Sales Order page select Actions, Posting, Prepayment, Prepayment Test Report..., and then select Print or Print Preview.

  7. If you have correctly completed all the data necessary to issue a prepayment invoice, on the Sales Order page, select Actions, Posting, Prepayment, and then post the prepayment invoice by selecting Post Prepayment Invoice... or Post and Print Prepmt. Invoice.....

  8. If the prepayment invoice is posted, the Status field on a relevant sales order is changed into Pending Prepayment. As a result of this status, order data can be edited.

    Important

    If it is necessary to post (issue) more prepayment invoices into one sales order, change the order status from Pending Prepayment to Open, and then change the amount in the statistics window on the Prepayment FastTab in VAT Prepayment Amount field. A new amount entered in this field should be a sum of the previous and current prepayment invoice. Then verify the rest of the order details and select Actions, Posting, Prepayment, then Post Prepayment Invoice ... or Post and Print Prepmt. Invoice

The printout of the advance invoice issued includes the prepayment amount, the receipt date of payment, the amount of tax calculated according to the formula: the amount of tax = (prepayment amount received x tax rate)/(100 + tax rate) and order details.

Issuing a Prepayment Credit Memo

If a prepayment invoice has been issued by mistake or with errors, it can be corrected by issuing a prepayment credit memo. A prepayment credit memo reverses the prepayment invoice, therefore no changes are allowed in sales order lines before the prepayment credit memo is posted. To post a prepayment credit memo:

  1. In the card of a sales order the prepayment invoice is posted for, choose Actions, Posting, Prepayment, Post Prepayment Invoice or Post Prepayment Credit Memo.

    Note

    By posting prepayment credit memo, all prepayment invoices posted until the order date are reversed.

  2. After the system displays a message that prepayment credit memo has ben posted successfully, in the sales order window select Release, Reopen to change the order status into Open and enter necessary data changes.

  3. In order to post the prepayment invoice after changes have been made, perform the steps described in Issuing a Prepayment Credit Memo.

The printout of the credit memo that has been issued contains net, VAT and gross total amounts of the prepayment invoices issued for an order. The printout also shows numbers of prepayment invoices that are to be corrected with invoice dates and amounts.

Issuing a Final Invoice for an Order

If all prepayment invoices have been issued for a sales invoice, and items have been shipped, you can post a final sales invoice according to the standard procedure used for sales invoices. Partial invoicing is also possible.

Note

A final invoice is issued only when the prepayment amount is not equal to the total order value.

The printout of the final invoice issued shall include the total value of goods or services less the amount of prepayments issued and a tax amount less the total amount of tax shown in prepayment invoices. Under the Goods and Services Tax Act, the final invoice also contains the numbers of prepayment invoices issued prior to delivery of goods or service, together with the dates of issue and gross amounts.

Applying Prepayment Amounts

From the user’s point of view, there is no difference between how the process is managed within Polish Localization and in the standard version with the international prepayment functionality. There are only two differences in the method for managing prepayment application:

  1. Prepayment deduction during the final partial invoicing.

    In final partial invoicing, the standard functionality decreases the final partial invoice amount by an amount calculated as a total prepayment amount to the order amount. This algorithm has been modified and the system deducts the highest prepayment amount possible. If the total prepayment amount is bigger than the amount of a final partial invoice, the final partial invoice amount is equal to zero. If the total prepayment amount is smaller than the amount of a final partial invoice, the final partial invoice amount will be decreased by a total prepayment amount.

  2. Reclassification of Deducted Amounts to Prepayment Invoice Amounts

    The standard functionality decreases the amount of a final invoice by a total amount of sales order prepayments. According to Polish legal regulations, the final sales invoice should contain numbers and amounts deducted from prepayment invoices. As a result of standard functionality modifications, the system displays sales prepayment invoices based on the number, sales date, net amount, VAT amount and gross amount.

Order Prepayments in a Foreign Currency

Polish Localization also modifies the standard features for handling of prepayments in a foreign currency. The standard functionality does not recalculate the prepayments automatically. With modifications offered within Polish Localization , the system calculates final invoice amounts in the following way:

  1. Prepayment deduction lines are calculated based on a historical exchange rate that was used on the prepayment invoice (or prepayment invoices if multiple prepayment invoices were posted for a sales order).

  2. Sales order lines are calculated based on a new exchange rate used to issue a final invoice.

  3. The system calculates the line amount in a sales order based on a historical exchange rate used for a prepayment invoice, and then it calculates the difference between this amount and sales order lines value which is calculated based on a new exchange rate which was used to issue the final invoice. The net difference amount is posted on the G/L account of positive and negative exchange rate differences, and the VAT amount difference is posted on a VAT settlement amount. A relevant VAT entry is created.

  4. The system posts receivables from a customer as a difference between gross sales order amount and prepayment invoice amount based on a new exchange rate used to post the final sales invoice.