1. 1 of 23 DA1236 Prepayments Last updated: March-2004 DA1236 Prepayments

2. 2 of 23 DA1236 Prepayments Last updated: March-2004 Overview Overview of Prepayments With your system set up to use Prepayments functionality is provided that enables the VAT element of an advance payment (prepayment) to be recorded in a VAT specific General Ledger control account until the payment is matched and posted The mechanism for managing this functionality is clear and auditable Note that to use this functionality your system must also be set up to use European VAT (DA0370) Overview of Prepayments With your system set up to use Prepayments functionality is provided that enables the VAT element of an advance payment (prepayment) to be recorded in a VAT specific General Ledger control account until the payment is matched and posted The mechanism for managing this functionality is clear and auditable Note that to use this functionality your system must also be set up to use European VAT (DA0370)

3. 3 of 23 DA1236 Prepayments Last updated: March-2004 General Supporting Files

4. 4 of 23 DA1236 Prepayments Last updated: March-2004 VAT Codes This option has been modified to allow prepayment control and prepayment revenue/cost posting codes to be defined Note that if these posting codes are not defined the VAT code cannot be used for prepayments Only non-revenue posting codes can be entered for the Prepayment control but it must be left blank if a Normal VAT code has been entered The Prepayment account (revenue/cost) posting code must be flagged as a revenue account if the Ledger code is set to R or a non-revenue code if the Ledger code is P – the VAT code defined against the posting codes must also match the current VAT code

5. 5 of 23 DA1236 Prepayments Last updated: March-2004 Prepayment Processing

6. 6 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Receivable Note that this system is set up to use Multi-currency Receipts (DA0814) Enter, as before, the Cash batch and batch control information, then the cash item This option has been modified to allow unallocated cash to be marked as a prepayment

7. 7 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Receivable Enter the cash item details... …including any unallocated amount Then, to mark the Unallocated amount as a prepayment, select F13-Prepayment

8. 8 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Receivable You can now define the Prepayment VAT code Note that only VAT codes that are set to Receivable (R) and have prepayment accounts are displayed in the browse for selection (see slide 4) To view the calculated amounts and posting codes relating to the prepayment, select F8-Refresh – to accept the prepayment amounts, select CR-Confirm Note that this functionality is NOT available for Accounts Receivable Refunds

9. 9 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Receivable When the batch is posted, 3 prepayment accrual postings are generated in the appropriate General Ledger accounts and the VAT Register updated – the prepayment VAT protocol number is taken from the system key SLLASTVPR Note that prepayments can only be registered to a normal VAT Register – if the customer has a pending VAT Register, the VAT is updated to the associated normal VAT register instead The Prepayment Calculations can be viewed on slide 19 Cash postings and journal postings reverse the amounts when the prepayment item is matched and posted – partial matching is allowed

10. 10 of 23 DA1236 Prepayments Last updated: March-2004 Journals – Accounts Receivable The prepayment cash item can be matched against the invoice using a journal Reversing prepayment accrual postings are generated in the appropriate General Ledger accounts and the VAT Register updated when journal is posted

11. 11 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Payable The functionality works in the same way as for Accounts Receivable cash – you enter the Cash batch and batch control information, then the cash item, followed by the cash item details, including any unallocated amount This option has also been modified to allow unallocated cash to be marked as a prepayment Then, to mark the Unallocated amount as a prepayment, select F13-Prepayment

12. 12 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Payable You can now define the Prepayment VAT code Note that this time only VAT codes that are set to Payable (P) and have prepayment accounts are displayed in the browse for selection (see slide 4) To view the calculated amounts and posting codes relating to the prepayment, select F8-Refresh – to accept the prepayment amounts, select CR-Confirm

13. 13 of 23 DA1236 Prepayments Last updated: March-2004 Cash – Accounts Payable When the batch is posted, 3 prepayment accrual postings are generated in the appropriate General Ledger accounts and the VAT Register updated – the prepayment VAT protocol number is taken from the system key PLLASTVPR Note that prepayments can only be registered to a normal VAT Register – if the supplier has a pending VAT Register, the VAT is updated to the associated normal VAT register instead The Prepayment Calculations can be viewed on slide 19 Cash postings and journal postings reverse the amounts when the prepayment item is matched and posted – partial matching is allowed

14. 14 of 23 DA1236 Prepayments Last updated: March-2004 Transactions enquiry – Accounts Receivable The third toggle screen (second toggle screen in Accounts Payable Transaction enquiry) of transaction details includes a prepayment indicator – posted items that have a corresponding prepayment record display a ‘P’ in this field This option has been enhanced to display the posted prepayment details Highlight the transaction then select the F12-More action to display the list of further options

15. 15 of 23 DA1236 Prepayments Last updated: March-2004 Transactions enquiry – Accounts Receivable The option Prepayments has been added to the list of options available – highlight this option then select CR-Select to display the prepayment information for the selected transaction

16. 16 of 23 DA1236 Prepayments Last updated: March-2004 Transactions enquiry – Accounts Receivable The prepayment information for the selected transaction is displayed

17. 17 of 23 DA1236 Prepayments Last updated: March-2004 Prepayment Processing – Example

18. 18 of 23 DA1236 Prepayments Last updated: March-2004 Prepayment Calculations The VAT amount is calculated from the gross amount entered as follows: VAT amount = (gross amount / (100+VAT Rate) * VAT Rate The VAT amount is then subject to the VAT rounding rules defined on the corresponding VAT Code record The nett amount is calculated as: Gross amount – VAT amount

19. 19 of 23 DA1236 Prepayments Last updated: March-2004 Accounts Receivable Cash Prepayment For an Accounts Receivable prepayment item value £117.50 with a VAT code V (17.5%) the prepayment postings are as follows: Accounts CR DR Prepayment Control 117.50 VAT Payable (V) 17.50 Prepayment Account100.00 A VAT Register record reflecting the above figures is also created

20. 20 of 23 DA1236 Prepayments Last updated: March-2004 Accounts Receivable Cash Prepayment When the invoice or journal is matched to the prepayment cash item and posted the VAT register and General Ledger accruals are ‘reversed’: Accounts CR DR Prepayment Control117.50 VAT Payable (V) 17.50 Prepayment Account 100.00 This example would be in reverse for Accounts Payable prepayments

21. 21 of 23 DA1236 Prepayments Last updated: March-2004 Auditing Prepayment Transactions

22. 22 of 23 DA1236 Prepayments Last updated: March-2004 Auditing of Prepayment Transactions Prepayments are distinguishable on the following audit reports, the corresponding VAT amounts are also shown: Accounts Receivable Cash Audit Trail Accounts Payable Cash Audit Trail Accounts Receivable Journal Audit Trail – the transaction amounts are not detailed Accounts Receivable Refund Audit Trail Accounts Payable Journal Audit Trail – the transaction amounts are not detailed Accounts Payable Invoice Audit Trail – if an invoice has been matched against a prepayment item, the G/L distributions list, if selected for printing, includes the prepayment reversals The VAT element of the reversals is not included in the VAT sub-totals, however, it is included in the VAT table at the end of the report

23. 23 of 23 DA1236 Prepayments Last updated: March-2004 Auditing of Prepayment Transactions All prepayment items associated with an item can be archived using the following options: Accounts Receivable Archive Transactions Accounts Payable Transaction Archiving Prepayments are distinguishable in the following options: Accounts Receivable Archived Transactions Accounts Payable Archive Transactions