Payment Plans in Sales Orders
Introduction and general statement
In order to meet tax requirements, DYCE Job Billing has made extensive changes to Prepayments in the sales area. The terms Prepayments and Down Payments will be used interchangeably throughout the remainder of this documentation.
In addition, the implementation is currently based on the latest requirements of German tax law. The tax is shown in the prepayment invoice, but this is only due when the payment has been received. The tax is then automatically posted when the payment is received.
For basics on how Prepayments work, please refer to this part of the Microsoft documentation.
Masterdata for Prepayment Setup
Before starting the masterdata setup, some basic decisions need to be made. The basic system setup can be used to control whether:
- the tax shown on the prepayment invoice/credit memo should be posted as unrealized and therefore not yet due,
- a partial or final invoice can be created, even if there is not yet an incoming payment, or
- a separate document number range should be used for the Prepayment Invoices / Credit Memos posted. The setup is explained in this part of the Microsoft documentation.
General Ledger Setup
In General Ledger Setup, the Prepayment Unrealized VAT field (in the General fast tab) controls how (unrealized) VAT should be posted when posting a Sales invoice. For more details on Prepayments incl. instructions on how to set up the VAT Posting Setup can be found in this part of the DYCE documentation.
Sales & Receivables Setup
In the fast tab Number Series the number series for the posted Prepayment Invoices or Prepayment Credits Memos are stored. Thus, separate number series can be used for prepayment documents.
If the same number series should be used for Prepayment Invoices and Credit Memos as for regular sales documents, the same number series can be stored here.
Further options for Prepayment
Both for customers (in the Payments fast tab) and for items (via Related / Sales / Prepayment Percentages), fixed percentages for down payments can be stored. These default values are always used automatically when a new sales document is created for the corresponding customer. However, the following should be noted:
The Prepayment % field in the customer is transferred to the sales document field of the same name when the Sales Order is created. This means that a general Prepayment Percentage is defined at the Customer, which is basically used for all sales to this Customer. On the other hand, it is possible to define in the item (independently of the customer deposit) that when this item is used in the sales document, a certain down payment is always due. This deposit is made via the Item Card (see above) in the Prepayment Percentages page and can - as in the Sales Price table - apply to certain groups, but also to certain individually listed Customers.
The defaults on the item override the defaults on the Customer. This means that if a Customer has a general Prepayment Percentage set and purchases an item that also has a Prepayment Percentage set, the sales document will take over the general percentage, but the Sales Line will use the Prepayment Percentage from the item. Both default values can be adjusted manually. When the down payment invoice is posted, the value from the Sales Line wins.
The value in the Prepayment Percentage field on the Customer can contain a Prepayment Percentage that applies to all orders for that Customer, regardless of the items or Services in the Sales Order lines. If, on the other hand, prepayments are to be set up for individual items, it is recommended that the Prepayment Percentage field on the customer be left blank and instead the Prepayment Percentages be entered in the Prepayment Percentages page of the Item Card. Both types together may lead to an undesired result.
Unrealized VAT
In Business Central standard it is possible to initially post the VAT from Prepayment Invoices for which payment has not yet been received as unrealized VAT and to automatically re-post it as VAT when the payment is posted. In this way, the VAT will only be included in the VAT statement in the month in which the payment is received. If this is desired, the indicator in the Unrealized VAT field in the General Ledger Setup (fast tab General) must be set to YES. In addition, when setting up the VAT Posting Setup, the Unrealized VAT Type field is used to control what portion of the VAT should be reposted from Unrealized VAT to realized VAT if partial payments are received to clear the Prepayment Invoices. In the field Sales VAT Unreal. Account, the account to which the unrealized VAT is to be posted must be specified.
For further explanation of Setting Up Unrealized VAT and Posting Methods for VAT, please refer to the parts of the Microsoft documentation mentioned here.
Sales process with Prepayment
Sales Order
After the Sales Order is created, the Prepayment % rate and the payment condition (in the Prepmt. Payment Terms Code field) for the prepayment invoice are stored in the Prepayment fast tab. The value entered in the Prepayment % field is then applied to all lines.
The Prepayment % field remains empty if different percentages or the absolute values per Sales Line are to be used. In this case, the deposit is done directly in the Sales Order lines (see next section).
Document lines
In the Sales Order lines, the Prepayment % rate or the Prepmt. Line Amount Excl. VAT can be entered (or overwritten).
The Prepmt. Amt. Inv. Excl. VAT shows the amount already invoiced for each line (the field is not editable).
In the Prepmt. Amt. to Deduct Excl. VAT field, the amount to be deducted is first automatically calculated and entered based on the quantity to be invoiced. This amount can be changed manually, but the system ensures that the prepayment amount to be deducted cannot be entered higher than the remaining amount of the line.
If a partial invoice has been created, the Prepmt. Amt. Deducted Excl. VAT amount will be shown in the corresponding field.
It is possible to create multiple Prepayment Invoices for one Sales Order. After a Prepayment Invoice has been created, the order will be marked accordingly via the Prepayment Invoices for Cust. Ledger Entries exist field (see also section Prepayment Customer Ledger Entries).
Create Prepayment Invoices
After all information has been set up in the Sales Lines, the Create Prepayment Invoice action (via Actions / Payment Plan) will create an unposted prepayment invoice. If the Post Invoice checkbox is selected, the Prepayment Invoice will be created and posted immediately. The unposted invoice can be opened and viewed via the call Prepayment Invoices (via Related / Prepayment) and, for example, the text information can still be changed.
In the Prepayment Invoice lines, the G/L account stored (field Sales Prepayments Account in the General Posting Setup) is addressed in each invoice line, but the description texts from the corresponding Sales Order lines are transferred to the unposted invoice. This allows the user to see exactly which line items are being invoiced as prepayments.
Prepayment Customer Ledger Entries
When the Prepayment Invoice is posted, Prepayment Customer Ledger Entries are created. These can be viewed in the Sales Order via the call Prepayment Customer Ledger Entries (via Related / Prepayment) filtered for the respective order. At a glance, all Prepayment Invoices and Prepayment Credit Memos are displayed here with the related line amounts in document currency and in local currency (LCY) of the client.
If the Closed Ledger Entry field is checked, this invoice item has already been paid. A complete overview of all Prepayment Invoices and Credit Memos in the system can be obtained by searching for Prepayment Ledger Entries (Alt+Q).
Post incoming payment
When posting the incoming payment for the down payment, there are no special features to be considered. Depending on the setting in the VAT Posting Setup, the incoming payment will then automatically transfer the tax portion from the Unrealized VAT account to the Realized VAT account.
Partial and final invoice on a Sales Order
In case of a partial or final invoice of the Sales Order lines, the prepayment amount already made will be deducted. If at this time the payment receipt for the Prepayment Invoice has not yet been posted, a corresponding note will be issued - however, it is still possible to create a final invoice.
In the case of partial invoicing (adjustment of the quantity in the Qty. to Invoice field), the prepayment amount in the Prepmt. Amt. to Deduct Excl. VAT field is also automatically adjusted accordingly.
It is also possible to change the (automatically) entered default value in the Prepmt. Amt. to Deduct Excl. VAT field. However, it is ensured that in the case of a partial invoice, only so much can be deducted at any one time that the prepayment amount is not higher than the actual invoice amount in the final invoice.
If one or more prepayment invoices are created for an order, they will be taken into regards in the final invoice. Here, all prepayments are summarized per order line. The final invoice cannot be created as long as the prepayments have not been invoiced.
Create Prepayment Credit Memo
If the Prepayment Invoice was created incorrectly, a Credit Memo can be used to revoke it. The Create Prepayment Credit Memo function (via Actions / Payment Plan) will re-credit all calculated prepayments that have not yet been deducted in a partial invoice. In the fast tab Options, a clearing can be made with the previously posted down payment invoice, so that the posting of the credit memo also clears the open invoice item at the same time. If the Post Credit Memo checkbox is selected, the credit memo is posted immediately by clicking OK. If, on the other hand, the indicator is not set, an unposted credit memo will be created (analogous to invoice creation), which can still be viewed before posting and/or in which text lines can still be entered if necessary.
If a currency is used and different currency exchange rates apply per invoice / partial invoice / prepayment, a retroactive currency exchange rate adjustment is carried out and posted with the final invoice for all invoices / credit memos issued.
Sales Process with Payment Plans
In addition to manual prepayments, DYCE offers the option to set up a Payment Plan. This is a preliminary stage to the prepayment in order to be able to store the negotiated payment plan data in advance in the system. There are separate Payment Plan Steps for handling Payment Plans. Each stage can be applied to one or more Sales Lines. The Payment Plan feature in DYCE Job Billing includes:
- Creation of Payment Plans for Sales documents
- Multiple payment levels with assignment to different Sales Lines
- Same handling regarding billing - no matter if using a Payment Plan or manual prepayments
If a Payment Plan is used, further processing must be done through it. It is not possible to mix manual prepayments and a Payment Plan within one Sales document.
Setting up a Payment Plan
The distribution of Payment Plan Steps percentages to the related lines is always based on the line amount. Thus, the sales amount of the related lines serves as a criterion for the distribution of the prepayment amount to the Sales Order lines. There is no need to make any further settings regarding the Payment Plan, everything else is done directly in the Sales document.
Using a Payment Plan in a Sales Order
After a new Sales Order is created, the agreed Payment Plan is created directly in the document using the Payment Plan action (via Related / Prepayments). The Payment Plan can include one or more steps. Each Payment Plan step contains either a fixed amount (Payment Amount field) or a percentage (Payment % field) and must relate to a specific Sales Order line. The link to the Sales Order line is established using the Select Sales Lines action. In the Payment Plan Sales Line Selection page that opens, the link to the Sales Lines is made per line in the Payment Plan by selecting them. The selected lines are marked by the Selected field. At the same time, the Lines attributed field in the Payment Plan Steps indicates that Sales Lines are already assigned to that step.
If multiple Payment Plan Steps of similar or the same content are entered, it is recommended to create the additional lines by copying them. This can be accomplished by using the Copy Step action.
The Payment Plan Steps also contain additional fields with the following purpose:
| Field | Meaning |
|---|---|
| Description | The text entered here will be copied as text in the posted Prepayment Invoice and will also be printed as text in the document. |
| Planned Invoice Date | The agreed date when the prepayment is to be made is entered here. This entry is optional. |
| Payment Terms Code | A payment term for the Payment Plan Step that differs from the document can be entered here. This entry is optional. |
| Invoice No. | Indicates the Document No. of the invoice used to invoice the Payment Plan Step. |
| Invoice Posting Date | Indicates the Posting Date of the invoice used to invoice the Payment Plan Step. |
In order for a Payment Plan to take effect, it must be Released. This is done by the action of the same name in the Payment Plan and is displayed in the corresponding field in the Prepayment fast tab of the Sales Order. Once a Payment Plan is released, the Payment Plan Steps cannot be changed. To change the steps, a reset is required, which is achieved by the Reopen action.
After leaving the Payment Plan Steps page, the Sales Order (in the Prepayments fast tab) will be marked accordingly by the Payment Plan Exists field. This field can be used as a filter criterion, for example, to display all Sales Orders with a Payment Plan stored.
Invoicing a Payment Plan Step
Invoicing a Payment Plan Step is similar or almost identical to the procedure for creating Prepayment Invoices (see section Create Prepayment Invoices et sqq.). After all information has been entered in Sales Lines and Payment Plan Steps and the Payment Plan has been released, the Create Prepayment Invoice action (via Actions / Payment Plan) is used to invoke the functionality. The only difference to a normal Prepayment Invoice is that the system has already recognized the existing Payment Plan in advance and automatically activated the Use Payment Plan indicator. After confirming with OK, the list of possible Payment Plan Steps for this document is displayed. The desired level can be selected with the help of the record marker. An unposted (or if the Post Invoice indicator is set, a posted) prepayment invoice will be created for the selected step.
Only one Payment Plan Step can be selected per Prepayment Invoice at a time.
After the Prepayment Invoice is posted, the Invoice No. and Invoice Posting Date are transferred to the Payment Plan Steps page in the previously selected Payment Plan Steps. If another Prepayment Invoice (e.g. for the next step) is created for the same Sales Order, a warning message will appear before posting if there are any unpaid Prepayment Invoices. The user can decide to continue or cancel the operation. If he decides to continue, the next Prepayment Invoice will be created - despite the warning.