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Installment Sale

Installment Sale

Owned by Lango: Language and translation manager
Last updated: Oct 02, 2024Version comment
8 min read

These are contracts with Financing Type = Instalment Sale. Invoicing on these contracts includes:

  • Generate and post an introductory sales invoice (tax document) for the total sales amount of the installment sale. A long-term receivable is posted

  • Posting Payment Calendar Payments

    • Generate a Posted Sales Invoice, posting a short-term receivable that will be paid by payment from the customer

    • generating a fictitious payment to settle a long-term receivable  

Insurance for installment sales can be invoiced separately or can be included in the installment sale.  

Set up invoicing for installment sales

The specific settings for installment sales are described in the documents:

Assumptions

A prerequisite for invoicing the sales price (tax document) is to fill in the documents for invoicing in the Financing Contract on the Instalment Sales tab.

A prerequisite for generating a partial invoice and a fictitious payment is the creation of a Payment Calendar.

Instalment Sale Selling Price

Invoice for the total selling price of the installment sale. This invoice serves as a tax document. It cannot be generated manually, but is created and posted automatically by the system when the contract is activated. The basis for invoicing is the data on the Financing Contract on the Instalment Sale tab and is generated during the contract calculation. The Instalment Sale tab is described in Smlouva bez služeb.

Note: If an installment sales contract contains insurance, it is not included in the invoicing and the subsequently generated invoice does not include insurance.

Activation Sales Price Invoicing

The invoicing process includes steps:

  • Controls

  • Generate an invoice header

  • Generate invoice lines

  • Posting an Invoice

  • Financing Contract Update

Controls:

  • Financing Type = Instalment Sale

  • The customer number on the contract is filled in

  • The detailed contract status must have posting from the payment calendar enabled,

    • Allow Down Payment Posting = Yes

    • Allow Posting from Payment Cal. = Yes

    • Allow Partial Credit Posting = Yes

  • Calculation Variant = No, Change Copy = No

  • The Gen. Bus. Posting Group, Gen. Prod. Posting Group, and VAT Bus. Posting Group on the contract are filled in

  • Handover Date Must Be Filled In

  • Sum of fields Principal (IS) + Interest (IS) + VAT Amount (IS) = Total to Pay (IS)

  • Document No. (SP) on the contract is blank

Error messages within checks:

  • Detailed contract status does not allow for posting

  • The sum of principal, interest, and VAT is not equal to the total amount to be paid

  • Handover Date Not Filled In

  • Contract Status Not Active

  • Posted (SP) is Yes

To generate an invoice header:

If the Cancellation Posting (SP) = No field is on the Financing Contract, it generates a sales invoice. The field is hidden, it's just in the background. To fill in the important fields in the invoice header:

  • Number

    •  Generates a Payment Document based on the Contract Model > settings

      • Contract/Payment = Financing Contract No. is used

      • Number series = the number from the Part Payment Document Nos. is used

  • Customer

    • Financing Contract Customer

  • Posting Date

    • From Financing Contract, Posting Date (IS) field

    • If it is posted to a closed accounting period, the date may be shifted to the 1st day of the open accounting period

  • VAT Date

    • From Financing Contract, VAT Date (IS) field

    • if it is posted to a closed accounting period and the Posting Date is changed, then the VAT Date is updated and subsequently copied to the contract after posting

  • Document Date

    • Work Date

  • Maturity date

    •  From the Contract Expected Termination Date (Expected Termination Date)

  • Dimensions (global and non-global)

    •  From the contract

  • External Document No.

    •  Contract No.

  • Reason Code

    •  of Reason Code Setup in Financing for Accounting Operation Type = Sales Price Invoice

  • Currency Code

    •  Currency Code from Financing Contract

  • Currency Factor

    • 1/Contract exchange rate from the contract header

  • VAT Bus. Posting Group

    •  from the Financing Contract

  • Customer Posting Group

    • if the field Use Customer Posting Group (SP) = Fixed Receivable is set in OneCore Posting Setup, then the Customer Posting Group of Sales Price (IS) is used from the contract

    • if the Use Customer Posting Group (SP) = blank field is set in OneCore Posting Setup, then the Customer Posting Group will be used from the contract

  • Payment Terms Code

    •  From customer; if the Payment Terms Code on the contract is different from the one on the customer card, the code from the contract will be used

  • Payment Method Code

    •  From customer; if the Payment Method Code on the contract is different from the one on the customer card, the code from the contract will be used

  • Finance Charge Terms Code

    •  From customer; If it is different on the contract than on the customer card, the code from the contract will be used

  • Bank Account Code 

  • Variable Symbol

  • Invoice Print Type

    • Installment

Sales Invoice Lines

  • Introductory texts

    • from the Standard Text Code according to Reason Code Setup in Financing,

    • or text lines from Recurring Sales Lines (= Standard Sales Codes)

  • Posted Lines with Object of Sales

    • they are created according to OneCore Posting Settings (for Table Type = Contract Header). In particular, the following will be used in the row from the settings:

      • General Posting Groups

      • Account number

      • Description

      • Invoicing Entry Code - the field is hidden and is only informative

    • VAT Prod. Posting Group

      • From the contract; if the total amount from the VAT Base (IS) field is invoiced, the VAT Interest posting group is used

Posting a Sales Invoice

The job automatically posts the generated sales invoice. The user can find the posted sales invoice in the list of posted invoices, or in the contract in the information box in the Contract Balance (LCY) field.

When the invoice is posted, a Customer Ledger Entry (Long-term Receivable) is created that is waiting to be settled with a fictitious payment. A fictitious payment is created by posting a payment of a payment schedule.

Notification:

Invoices for the SP sales price do not have a specific marking that can be used to block matching of the invoice with payments on bank statements or in the Apply Customer Ledger Entries batch job. This task is part of the OC module Payments Prepayments. In the job, you can use the filter on the Hold field to exclude the item from automatic matching. However, the user must manually enter the code for the On Hold field on the customer ledger entry that represents the installment sales invoice.      

 

Contract Updates

The number of the posted sales invoice is written to the contract in the Document No. (IS) field. In Document Date (SP) writes the Working Date. The Posting Date (IS) may be changed during invoicing if it is posted to a closed accounting period. In this case, the Posting Date (IS) on the contract header is updated. At the same time (according to the Sales and Receivables Setup, if Default VAT Date = Posting Date) the VAT Date is also changed, which is written retrospectively on the contract header as VAT Date (IS). Next, it marks Posted (SP) = Yes, and the background field is Canceled (SP) = No

Cancellation of the Instalment Sales Price

It is not possible to cancel an invoice for the sale price of an installment sale on the header of the contract. Adding the cancellation function to a contract can be added as a customer adjustment.

If necessary, it is possible to use the standard BC functions to create a credit note, but in this case the header of the Financing Agreement will not be updated.  

Instalment Sale Instalment

Payment invoicing

Instalment instalments are accounted for in the same way as for contracts without services, i.e. individually from the payment calendar by the Post button or by the Post Financing Instalments batch task (without services).

Specifics of the billed instalment of instalment sale:

  • According to OneCore Posting Settings, two documents are posted - Sales Invoice and Internal Document for Fictitious Payment, both documents form Customer Ledger Entry

  • These are not tax documents. Principal and interest VAT calculated on the payment schedule lines is included in the total invoiced amount, but VAT is not charged.

  • Fictitious payment automatically settles the invoice to the sales price of the installment sale

Customer Ledger Entries

An item of the Invoice type is a prescription for payment of an installment, it is open and waiting to be settled with the payment received from the customer. It is accounted for as a short-term receivable. The invoice does not contain VAT (see the Financial Setup document, chapter Installment Sales Posting Setup).

The item with type <prázdný> is fictitious remittance and is closed because it has been automatically applied to the invoice for the installment sales price.

Instalment Sale Insurance

If insurance is arranged for an installment sales contract, it can be included in the payments or invoiced separately (see Insurance Contract for Changes and žádosti_OC_BC_CZ).

Insurance invoiced separately

  • The invoice for the installment sale price does not contain insurance

  • A separate Insurance Calendar is generated for the insurance out of payment, from which the insurance payments are invoiced    

Insurance Included in Installments

  • The total amount to be paid (IS) on the Financing Contract, and consequently also the invoice for the sale price of the instalment sale, does not include insurance:

  • The insurance is calculated on the lines of the payment calendar and (according to the settings) VAT can be calculated for the insurance.

  • In this case, both insurance and VAT insurance are invoiced and posted because they were not included in the invoice for the installment sale price. 

  • For fictitious payment of instalment sale, it is then necessary to set up posting so that it does not include insurance (the settings will therefore be the same as for instalment sale with insurance outside the instalment).  

Cancellation of a posted instalment of an instalment sale

A posted payment can be canceled either individually or by a batch job.  

If the user has posted a line in the installment sales payment calendar and runs the cancel function, the system will report an error message after confirming the query "Really cancel = YES":

 

image-20240621-185659.png

 

image-20240621-185710.png

This is due to settlement on the customer ledger entry.

The user selects the line with the document that he wants to cancel and selects Navigate.

After clicking on Customer Ledger Items, related items will be displayed.

Mark the item that is matched with the invoice and run Unapply Entries by selecting Process - Unapply Entries.

The Unapply Customer Entries window opens, in which the Unapply Entries option evaporates the items.

 

Confirming the query by selecting YES cancels the settlement.

 

This unblocks the line and it is possible to start Cancel on the line of the payment calendar. After the cancellation is completed, the changed flags are Posted =NO, Canceled=YES.