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Instalment Sales Tab

Instalment Sales Tab

Owned by Lango: Language and translation manager
Last updated: Sept 13, 2024 by Tomas Nagy
4 min read

The tab is only displayed for Financing Type=Instalment Sale, otherwise it is hidden.

Instalment sale (as the name implies) is a special type of contract that has the following main characteristics:

  • A leasing company buys an item for immediate sale. It is therefore a purchase relationship between the leasing company and the customer (it is not pure financing as in the case of a loan).

  • Then the selling price of the item is determined (explanation below), which is invoiced to the customer after the contract is activated. The sales price invoice has a deferred due date.

  • The selling price is determined as the sum of the principal (financed value) and interest payments for the given duration of the contract, then VAT is added to this price according to the applicable legislation.

  • The customer then repays the receivable to the leasing company in agreed instalments.

  • From the nature or calculation of the selling price, several conclusions will emerge that have a major impact on the administration of the contract:

    • Interest is calculated and included in the sales price in advance, i.e. I do not recommend changing the duration of the contract, the periodicity of repayment, etc., because it is not possible to apply these changes to an already posted sales invoice.

    • Cancellation of a sales invoice is legally possible only when withdrawing from a purchase contract, or if the item has defects or does not meet the expected and agreed parameters. These processes are very difficult to solve and leasing companies usually solve them through special agreements. For this reason, OC does not allow you to cancel a sales invoice.

  • In the case of an instalment sale, the leasing company is not the owner, not the operator, of the asset. Conclusions:

    • The contract is usually secured by a backup right to the object or a special contract on the transfer of ownership.

    • From an insurance point of view, individual insurance with a pledge in favour of the leasing company is recommended.

    • Insurance in instalments is also possible, but the so-called mediated insurance (instalments without VAT) is recommended. The reason for this is that the payment schedule in the case of instalment sale is not recognized as an invoice (tax document) – it is an invoice for the sale of an object with immediate VAT deduction on the part of the buyer. If the insurance is free of VAT (exempt), the leasing company can include it in the payment schedule, there is no need to send installment invoices. If there was insurance with VAT (i.e. collective insurance), the leasing company should issue and send invoices with VAT for insurance premiums for each payment period.

When creating a payment calendar before activating the contract, or some field during contract activation (posting a sales invoice) of the financing type installment sale, the system uses the activation wizard (see description Contract Changes) writes the data to the Instalment Sales tab.

Field: (all fields are non-editable)

  • Principal (IS) (Principal (IS))

    • The system automatically fills in the Input Price value when creating a payment calendar

  • Interest (SP) (Interest (IS))

    • When a payment schedule is created, the system automatically adds the sum of interest payments from the contract payment calendar.

  • VAT Base (IS)

    • Completes the system automatically when a payment schedule is created:

    • VAT Base (IS)=Principal (IS) + Interest (IS)

  • VAT Rate (IS) (VAT Rate (IS)

    • Completes the system automatically when a payment calendar is created.

    • To get the tax rate from the VAT Posting Setup, the VAT % field for the combination of the VAT Bus/Posting Group and the Interest VAT Posting Group specified on the contract

  • VAT Amount (SP) (VAT Amount (IS))

    • The system automatically fills in the calculated VAT value when a payment calendar is created.

  • Amount incl. VAT (IS)

    • Completes the system automatically when a payment calendar is created.

  • Document No. (IS)

    • Completes the system automatically as part of activation after creating a posted installment sales invoice.

  • Posting Date (IS)

    • Completes the system automatically as part of activation after creating a posted installment sales invoice.

    • The date is the same as the Handover Date.

  • Due Date (IS)

    • Completes the system automatically as part of activation after creating a posted installment sales invoice.

    • The date is the same as the Expected Termination Date.

  • VAT Date (SP) (VAT Date (IS))

    • Completes the system automatically as part of activation after creating a posted installment sales invoice.

    • The date is the same as the Handover Date respectively. Posting Date (IS)

  • Posted (SP) (Posted (IS))

    • Sets the system automatically to Y as part of activation when a posted installment sales invoice is created.

  • Customer Posting Group Sales Price (IS)

    • Completes the system automatically when creating a calculation/contract according to the settings of the financing contract template.

    • Used

      • When posting a long-term receivable, which is created by posting an invoice for the installment sales price when the contract is activated.

      • when posting an SP payment (according to OneCore Posting Settings) for posting a fictitious payment that settles a sales invoice – long-term receivable 

Hidden fields:

  • Canceled (IS)

    • The field is not user-available, the function of canceling an invoice for the sales price of installment sales is not supported in OC.

  • Cancellation Posting (IS) (19361)

    • It sets up the system automatically, it is not user-friendly. The field uses functions to generate a sales document for the sales price of an installment sale to select the document type. 

    • Election:

      • No - Generates a sales invoice when the installment sales contract is activated

      • Yes – currently not used (preparation for possible addition of the function for generating a credit note / cancellation of an invoice for the sales price of installment sale)  

An invoice for installment sales can be opened from the contract via the Contract Statistics factbox, clicking on the Contract Balance (LCY) field.

The Customer Ledger Entries report then opens:

image-20240612-092853.png

It is also possible to work with the invoice according to BC standards.

Note: In the picture you can see two posted invoices (for down payment and fa for installment sale).