Advance Payment#

General#

The "Advance Payment" application is a special ISV solution based on Microsoft Dynamics 365 Business Central¹. This is a special function extension of the standard solution Microsoft Dynamics 365 Business Central¹. It enables you to manage down payments in sales and purchasing correctly and reliably in accordance with legal requirements.

Link to Microsoft App Source "KUMAVISION Advance Payment"

Application areas#

The Advance Payment application enables the planning, creation and management of down payment invoices in the sales and purchasing area. Based on orders or purchase orders, all relevant documents and postings can be created and tracked via so-called down payment strings. Down payment accounting is completely integrated into standard processes, e.g. down payment invoices can flow into the dunning process and payment transactions. Data is entered and managed using the standard interfaces and documents. Down payment strings can be managed and analyzed centrally via new menu items.

Overview#

The Advance Payment application can be used in both sales and purchasing.

The down payment string forms the basis for the down payments. It specifies the business transaction for which down payments are to be made and posted. In sales, the basis for a down payment string is either the order, an individual order line or even a project; in purchasing, it is the purchase order or an individual order line.

A down payment plan can be stored for each down payment strand, in which it is defined at which time and in which amount down payments and final invoices are to be made.

Requested down payments are posted as down payment invoices. As no sales tax / input tax may be reported at this point in time, down payment invoices are posted with unrealized tax. Only when the payment is received is the tax realized and the requested down payments transferred to down payments received / made.

Receivables or payables from advance payments made are also shown in separate accounts so that they can be presented separately from actual receivables and payables.

Corrections to requested down payments can be posted using down payment credit memos.

With the invoice of the order / purchase order requested and made / received down payments can be cleared. A final invoice deduction can be created and posted automatically.

The current status of the transactions can be viewed at any time via the down payment strings. Detailed down payment statistics provide information on all related postings. Special views on the customer / vendor items allow to view the open or not final invoiced amounts for each down payment.

Establishment#

To use the application, some setups must be made. In this section you will learn what they are and how to configure them.

Down payment facility#

If the Advance Payment application is to be used, it must first be activated for the sales and purchasing areas. Only then will all relevant fields and buttons be displayed in the existing interfaces, and new menu items will be offered for selection. Activation is made in the down payment facility.

In addition, it shows which installations have already been completed or are still to be carried out.

Inforegister General#

Field Description Sale active Indicates whether the down payment functionalities are enabled for the sales documents. Purchasing active Indicates whether the down payment functionalities are enabled for the purchasing documents.

Inforegister settings#

Inforegister facilities completed#

This info tab gives you an overview of which relevant areas have already been set up or have not yet been set up.

Support information#

On this info tab you will be presented with information about the app.

Menu call "Manual setup#

The Manual setup button can be used to branch to the relevant setup tables. These are described in more detail in the following sections.

G/L accounts and posting groups#

Financial accounting facility#

Down payment invoice must be posted with unrealized tax. This means that the tax is not due until the payment is received.

In order for this situation to be taken into account, the fields "Unrealized VAT" and "Unrealized VAT Prepayment" must be activated in the financial accounting setup. Prepayment" fields must be activated on the "General" information tab.

Accounts Receivable / Accounts Payable Groups#

The collective accounts for down payments and the accounts for unrealized down payments must be defined in the customer / vendor posting groups:

Customer posting groups#

Vendor posting groups#

VAT product posting groups and VAT posting matrix#

For the correct tax treatment of down payment documents, new VAT product posting groups must be created, with which new rows for unrealized VAT treatment will be added to the VAT posting matrix.

A separate VAT product posting group should also be created for the transfer of unrealized down payments to down payments received / paid.

Example of new VAT product posting groups:

The VAT product posting group AZ19 is used for postings with the Unreal. Down payment account (see Accounts Receivable/Vendor Posting Group). The REAL_AZ19 posting group is used for down payment transfer postings.

Example of VAT posting matrix setup:

Non-deductible VAT#

For the processing of "Non-deductible VAT" the following settings in the VAT. Posting matrix to be taken into account.

In the rows for the calculation "Unreal. VAT." (Field: "Unreal. VAT Type" = percentage) the following settings must be made:

• The "Non-deductible VAT %" field must be filled with the value "0" (also not allowed in Microsoft Dynamics 365 Business Central¹ Standard).
• In the field "Non-deductible VAT. Purchase account" no account must be set up.
• In the "Allow non-deductible VAT" field, the "Allow" option must be set.

Advance Plan Template#

To simplify the management of down advance plan, down advance plan templates can be set up.

Based on the fields from the customer or vendor master and the documents, criteria can be defined when a down advance plan template should be used.

Any number of down advance plan lines can be defined per down advance plan template.

The lines of a down advance plan template can be inserted in the down advance plan by a function call. A list of available templates is displayed.

The call for editing the advance plan templates is made via the call with the same name via the user search. A new down advance plan template can be created via "New" in the menu ribbon.

Inforegister General#

Inforegister Lines#

Retention Setup#

To map withholdings in the down payment accounting, the types of withholdings are to be set up. You can call up the "Retentions" by means of the search term of the same name via the user search.

The fields of the withholdings are explained in detail below:

About the menu item "Dimensions" can be stored per retention, default dimensions.

Via the menu item "Translations", translations for the fields "Description" and "Description 2" can be managed for the illustration of multilingual vouchers.

Debit facilities#

Accounts Receivable & Sales Facility#

In the Accounts Receivable & Sales setup the basic settings for down payments in sales are made. All necessary parameters and defaults are set on the "Down payment" info tab. These are explained in more detail in the table below:

Debtor#

Further additional settings can be made on the customer card on the "Invoicing" info tab. These then apply specifically to this one customer.

Credit facilities#

Accounts Payable & Purchasing Setup#

In the Accounts Payable & Purchasing setup the basic settings for down payments in purchasing are made. All necessary parameters and defaults are set on the "Down payment" info tab. These are explained in more detail in the table below:

Vendor#

Further additional settings can be made on the vendor card on the "Invoicing" info tab. These then apply specifically to this one vendor.

Cash Flow Setup#

Posted down payment documents and down payment plans may not be included in the cash flow accounts of regular receivables and payables, but must be shown in separate cash flow accounts. For this purpose, the following cash flow accounts must be defined in the "Cash Flow Setup":

Origin codes#

Separate origin codes can be set up for down payment accounting documents in the "Origin code setup".

Report selection#

For down payment accounting, you can use your own documents, which must be entered accordingly in the report selection for sales and purchasing.

The following reports can be used for sales:

The following reports can be used for purchasing:

Down payment strands#

The down payment string forms the basis of down payment accounting. In the standard system, down payment strings can be created for the following sources:

• Sell orders
• Sales order lines
• Projects (sales side)
• Purchase orders
• Purchase order lines

As described in the setup, down payment strings can be generated automatically with the new creation of documents. If the parameter "Automatic creation of AZ strings for orders" is set in the Accounts Receivable & Sales setup (or "Automatic creation of AZ strings for orders" in the Accounts Payable & Purchasing setup), a down payment string will be created when creating a new document (or a new document line - setting per customer or vendor in the field "Down payments on document line level").

You can call up the down payment strings via the user search using the search term of the same name.

In the following, the fields from the overview are explained in more detail:

Use the buttons in the menu bar to maintain or retrieve additional information:

The down payment plan stored for the down payment line is displayed in the info box area of the window.

Create down payment strings manually#

If down payment strings are not created automatically when creating documents, they can be created manually from within the documents.

In the "Down payment string" field of the sales order or purchase order (or one of its lines) you can click "Link to down payment string".

The subsequent query must then be confirmed with the option "Create down payment string for this document".

If the document is to be linked to an existing down payment string, the option "Link to down payment string" can be selected.

If the document is already linked to a down payment line (a line number is displayed in the Down payment line field of the document), further actions can be performed via the link in this field.

Down payment plans#

The down payment plan defines which down payment invoices have to be issued and when. Final invoices can also be planned in down payment plans. Down payment plans are stored per down payment line.

This section describes how to create a down payment plan.

A down payment plan can be mapped based on a down payment string. The down payment plans can be accessed either from the source document (via the Down Payment String field) or from the Down Payment String window.

In the header of the down payment plan, information about the down payment string is shown. The following fields can be changed:

The rows in the down payment schedule map the individual planned down payment invoices and the final invoice. The fields must be filled as follows:

The following actions can be performed using the buttons in the ribbon:

Advance payments in sales#

This section shows a typical posting history of down payments in the Sales area. The basis for the down payment string is a sales order. A down payment plan has already been defined. The procedure for down payments at order line level or based on projects is analogous - the starting point is always a down payment string.

Create and post a down payment invoice#

The individual down payment plan lines that have not yet been retrieved can be retrieved in down payment invoices. This can be done in two different ways:

• Creating a down payment invoice from the down payment plan
• Create a sales invoice and call off the plan lines From the down payment plan, a sales invoice can be created automatically for one or more down payment plan lines of the planning type "Down payment". To do this, the desired lines must be selected, then the function "Create AZ invoice (f. selected lines)" is executed.

The created document will be opened directly afterwards.

In addition to the already known fields, the following fields are important for documents with reference to down payment strings:

Customer and posting date are taken from the down payment plan line. The down payment indicators are also set and the document is linked to the down payment line.

The down payment plan lines are copied to the lines of the document. The G/L account from the field "Deb. Unrealized Down Payments" field from the customer's posting group. It is important that this G/L account has a VAT product posting group with unrealized tax. Otherwise an error message will appear.

The sales price without VAT is filled with the down payment amount of the down payment plan line. If the "Prices incl. VAT" field is activated in the down payment line, the amount from the down payment plan is transferred to the "Sales price incl. VAT" field instead.

In the down payment plan, the "Unposted invoice no." field is filled after the invoice is created. The "Display created invoice" button can be used to return to the created A/R down payment invoice.

When posting, the next sequential number of the number series from the field Dept. down payment invoice numbers of the Accounts Receivable & Sales setup is used as the document number. Corresponding G/L items are created.

The receivable for this invoice is posted to the G/L account "Deb. Collective account down payments" from the customer's customer posting group.

The VAT items show the facts of the unrealized tax.

Additional information about the down payment is shown on the customer item.

If an A/R down payment invoice is created directly, the fields for the down payments must be set manually in the document header. If a down payment line was selected for which a down payment plan was also maintained, a function can be used to copy the plan lines that have not yet been called into the document.

Via the menu item "Prepare" > "Get down payment plan lines" in the ribbon, the down payment plan can be opened.

There, the relevant lines can be marked and the selection confirmed. The lines will then be inserted into the sales invoice.

In documents marked as down payment, only texts and G/L accounts can be used in the lines.

If an A/R down payment invoice is to be created for which no down payment plan has been defined, the document lines can also be entered manually. If a line with the type "G/L account" is created, the no. with the G/L account "Deb. Unrealized down payments" from the customer posting group.

Payment of a down payment invoice#

When paying a down payment invoice, the same options exist as when paying a normal sales invoice:

• Posting of a payment via a ledger sheet with specification of a clearing
• Posting a subsequent clearing in the accounts receivable item

When clearing a down payment invoice with a payment, the following transfer postings are made:

• Unrealized tax to sales tax
• Unrealized down payment to down payment received

The account for down payments received is drawn from the VAT posting matrix (Deb. Real. Down Payment Account field).

• Normal receivables account to receivables account for down payments

These accounts are determined from the customer posting group. Clearing for down payment invoices can also be canceled again. The transfers posted with the clearing are then reversed again, so that the down payment is again managed as posted but not paid.

These exchange rate differences are posted to the realized prepayment account when payment is made, so that the prepayments received correspond to the amount actually received.

Advance payment credits#

The following section shows how to credit an incorrect or overstated down payment invoice.

A credit memo is necessary if a down payment invoice was posted incorrectly. A down payment credit memo can also be created in the event that the down payment invoice is no longer required because a final invoice has been issued in the meantime.

An A/R down payment credit memo is initially recorded as a normal A/R credit memo, for which additional down payment information is then set:

If a down payment string is selected, the open down payment invoices for this down payment string are automatically proposed for selection. The "Customer item clearing" window opens. After selecting an invoice document, the "Clear with document no." field is filled and the document lines from the posted invoice are copied to the down payment credit memo.

Alternatively, the function "Call up AZ invoice for credit memo" can be executed under the menu item "Prepare" in the menu ribbon. Here, too, the list of open down payment invoices is displayed, which can be canceled with the credit memo.

• Only exactly one down payment invoice can be cleared with an A down payment credit.
• It is not possible to subsequently clear down payment invoice and credit note, the credit note must be cleared directly with the invoice when posting.
• Clearing between down payment credits and invoices cannot be canceled.

Posting the final invoice#

When the final invoice is posted, the down payments must be cleared or reversed. The clearing of the down payment takes place in the form of a credit note as a so-called final invoice deduction. Requested down payments can either be cleared with the final invoice deduction or credited. This is regulated by the setting "Final invoice for down payment invoices" in Accounts Receivable & Sales Setup. The other settings here control the creation of the necessary follow-on documents (Auto Post Final Invoices, Auto Post Remaining Amount Credits, Auto Post Realization Invoices fields). These documents can be automatically created and, if necessary, posted when the final invoice is posted. If this is not the case, the down payments must be cleared manually via documents.

If the final invoice is posted and the fields for automatic creation of follow-on documents are set, corresponding messages (or corresponding messages for creating and posting the follow-on documents) will appear.

Final invoice deduction#

With the final invoice deduction the down payments are cleared with the final invoice. The final invoice deduction refers to a down payment string, which means that only down payments for this down payment string can be cleared, even if other down payments may exist for the customer.

The final invoice deduction reduces the receivables from the final invoice issued by the cleared down payments and clears them.

For this to be mapped, the following fields in the document are relevant:

For the final invoice deduction, after the "Down payment document type", the field "Clearing with document no." must be filled first, if the document is created manually. The document number of the final invoice is specified here. In the "Down payment string" field, you can then select from which down payment string down payments are to be cleared. After selection, the down payments that have not yet been cleared appear automatically.

The selected lines are then transferred to the credit memo as document lines. As G/L account the account "Deb. Real. Down payment account" is taken from the VAT posting matrix. This is the case even if the cleared down payment is one that has not yet been paid. Made down payments that have not been received are then credited and re-posted as received down payment (see following section).

Final invoice deductions can also be created manually in this way.

When the final invoice and final invoice deduction are posted, customer items are created, invoice and final invoice deduction were cleared with each other.

Via the interface "Down payment string" this fact can be traced in further interfaces.

The down payment debit items show in detail the transactions posted to the down payment string and indicate which amount was invoiced, whether the invoice was paid or credited and whether it has already been finally cleared.

The down payment statistics also provide information on the current status of the down payment string.

Treatment of unpaid down payment invoices#

Unpaid down payment invoice must be credited with the final invoice. There are two cases, depending on the setting of the "Final invoice for down payment invoices" parameter in the Accounts Receivable & Sales setup:

• Unpaid down payment invoices are not cleared against the final invoice deduction (option: Paid): a down payment credit must be posted.
• Unpaid down payment invoices are cleared with the final invoice deduction (option: all): a down payment credit must be posted as well as a realized invoice for the down payments received.

The down payment credit memo is created in the same way as the reversal procedure (section "Down payment credit memo"). When the down payment credit memo is posted, the requested down payments are cleared again.

This also occurs when the unpaid down payment invoices have been offset against the final invoice deduction. However, as this has already reduced the down payments received, they must be reposted as realized.

This document is a normal sales invoice made with the account for down payments received from the VAT posting matrix (Deb. Real. Down Payment Account field). This clears the final cleared down payment of the final invoice deduction.

Cancellation options#

Cancellation of a down payment invoice#

Down payment invoices that have not yet been paid can be cancelled via down payment credit notes (see section "Down payment credit note").

Cancellation of a down payment#

If a down payment invoice has already been cleared with a down payment, the reversal of the posted down payment is done via the cancellation of the clearing and a subsequent write-off via a ledger sheet or the reversal of the payment transaction.

When clearing is cancelled, the transfer of down payments, receivables and VAT from unrealized to realized is reversed again (see also section "Payment of a down payment invoice").

Reversal of a final invoice deduction#

Cancellation of posted final invoice deductions is done by cancelling the clearing of final invoice and final invoice deduction. Thereby the opened final invoice deduction is automatically charged off via an invoice (with down payment document type final invoice deduction). The document number assignment for this reversal is defined in the Accounts Receivable & Sales setup (field Document number assignment final invoice deduction reversal and following).

When the clearing is cancelled, the reversal document is created automatically, a message about the created document appears.

The following picture then appears in the customer items: the final invoice was reopened in full, the final invoice deduction was reversed and cleared with the reversal.

• the realized invoice is manually charged off (=cancelled) via a credit note.
• The original unpaid down payment invoice that was reversed with a down payment credit memo to be manually re-posted via a new down payment invoice.

Overpayments#

It may happen that the amount of the deposit received exceeds the amount of the final invoice. Thus, more than 100% of the final invoice has been paid.

In the down payment debit items, such a case can be recognized by a negative open down payment amount after final clearing.

This amount can be automatically charged off via an overpayment credit note. Relevant for this are the settings in the Accounts Receivable & Sales setup (Max. credit amount of overpayments field and following).

To do this, select the item with the overpayment and call the "Overpayment credit memo" function. A credit note will be created and opened.

The credit note shows a reference to the down payment line. The G/L account for realized down payments is entered in the lines as well as the open, overpaid amount.

When the credit memo is posted, the overpaid down payment is cleared and an open item is created for the customer. This can now be used for a refund or for clearing with another invoice.

If an error occurred when creating a credit note, the credit note can be transferred to an invoice using the Copy document function ("Including header" must be activated in the options) and then posted.

Calculation cash flow planning#

When transferring cash flow planning information to the cash flow worksheet, the following origin types to be included can be selected when calling the "suggest worksheet lines" function:

• Sales Order Advance Plans
• Purchase Order Advance Plans
• Job Advance Plans

to define which down payment plans should be included in the cash flow planning. When considering the respective payment plans, sales order lines, purchase order lines and projects with down payment transactions are not included in the cash flow planning.

Even if the payment plans listed above are not included in cash flow planning, down payment invoices flow into cash flow planning and reduce the values for sales orders, purchase orders, and projects.

The account assignment to origin types is based on the cash flow setup.

Retentions#

In order to manage retentions for down payment and final invoices, it is possible to define any number of retentions for invoices.

When creating down payment invoices, negative lines are listed for the retentions in the respective invoice, so that the retentions amounts are deducted from the invoice amounts.

When posting invoices that contain retention amounts, an additional invoice document with the respective retention amount will be posted for each retention amount.

Allocation of retention amounts in the down payment plan#

If retentions are stored in the system, the call "Retentions" appears in the down payment plan on the info tab "Lines". If there are no retentions, the call is automatically hidden by the system.

The menu item "Retentions" opens a view in which all suitable retentions (matching "Supported cost type" and "Supported document type") are listed for the currently selected down payment plan line. Per withholding, a percentage of the down payment amount or a fixed amount can now be specified.

If a down payment invoice is created from the down payment plan, an additional line is inserted in the invoice document for each selected down payment.

The line contains the specified amount with a negative sign. The amount 1, is keyed to the "Unrealized account" of the Retention setup and takes into account the description from the retentions or their translations.

If there are additional dimensions stored on the "Retentions", they will be added to the line as well.

Assignment of retentions in orders / invoices#

For sales orders, purchase orders or invoices that are not created via the down payment plan, down payments can be entered in the document via the menu item "Insert down payments".

When the menu item is called up, the same view appears as when it is called up from the down payment plan, so that the amounts for the desired retentions can be stored there.

When closing this view, the lines for retentions are inserted directly in the respective document (sales order / purchase order / invoice).

Document posting#

When a document is posted, the system automatically checks whether it contains lines with withholdings. If this is the case, an additional invoice is generated and automatically posted for each line with a retention amount.

The document gets the same document/ and posting date and the same document number as the original document, only supplemented by the suffix from the Retention setup.

In addition, the payment term from the "Retention" is stored on the document.

If the original document is a down payment invoice, the newly created document for the retention will also be marked as a down payment invoice.

The document contains a line about the selected G/L account of the retention, the corresponding amount with positive show and the quantity 1. Here, too, any additional dimensions of the retention are taken into account.

When the document is posted, the "code" of the retention amount is transferred to the vendor/customer item, as well as to the generated project items or down payment project items. This serves the later evaluability.

Payment on down payment invoices#

When a down payment invoice created for a retention is paid, a transfer of the net amounts, tax and payables/receivables from the "Unrealized" to the "Realized" accounts takes place analogously to regular down payment invoices.

Here, in contrast to regular down payment invoices, the net values of goods are transferred from the "Unrealized account" to the "Realized account" from the "Retentions".

Evaluations#

In the reports "Vendor items per" and "Customer items per", the field "Retention filter" can be used to control whether retentions should be included in the result or not.

Evaluations#

The following interfaces can be used for evaluations or an overview of the current status for a down payment string:

• Down payment statistics
• Down payment debit item / down payment credit item

Down payment statistics#

The down payment statistics show a detailed overview of all business transactions posted in connection with this down payment line.

In the header, the Display amounts as field can be used to select whether net or gross amounts are to be displayed.

In the matrix, all planned and posted vouchers are listed on the left. The columns to the right of it show the individual vouchers and amounts per posting date.

Down payment item#

The customer or vendor items for the down payment line show additional information on the status of the down payments. In addition to the amount and remaining amount, separate columns show whether an amount has been paid or credited or whether it has been cleared via a final invoice deduction. The column "Open down payment amount (paid, not cleared for closing)" provides information about outstanding postings.

The buttons can be used to perform the following actions:

Cash flow#

In the "Cash flow planning statistics" and "Cash flow availability by period" presentations, the following types of origin are shown:

• Advance payment receivables
• Advance payment plans
• Down payment liabilities
• A/P down payment plans
• Project down payment plans
  Note
  Analogous to projects, project down payment plans are also shown with net amounts (see also cash flow setup).

In the Cash Flow Date Summary report, amounts for the down payment accounting source types listed above flow into the following standard source types:

• Receivables
• Payables
• Sales orders
• Purchase orders
• Projects

Reconciliation Entries#

To make the reconciliation of the general ledger and subledger more efficient, you can use the down payment reconciliation items to create a reconciliation list for down payment accounting. This enables you to reconcile unrealised and realised down payments (net) from the customer/vendor items or down payment strings with the corresponding accounts in financial accounting.

Create Reconciliation Entries#

First open the "Down payment reconciliation items" page via the "Down payment strings" ribbon.

Via "Create items", you can create new down payment reconciliation items based on the following criteria:

The temporary items with corresponding item types are created based on the filter criteria entered above. The items are determined by the system as follows:

Analysis#

Entries#

Via "Items" in the ribbon, you can open the page of the source item of the selected down payment reconciliation item. Alternatively, you can click on "Current items". No. origin item" to access it as well.

Analysis Print#

You have the option of printing the "Reconciliation of down payment transactions" report via "Print" in the menu ribbon.

The level of detail of the output in the report call is defined via the following parameters:

• Display down payment plan
• Display personal account items
• Display of G/L items
• Display VAT items

Analysis View#

Using the standard Microsoft Dynamics Business Central¹ analysis mode, you also have the option of flexibly analysing the down payment reconciliation items.

Down payments in purchasing#

For down payments in purchasing, down payment strings can be created based on purchase orders or purchase order lines.

The posting procedure and the corresponding documents are analogous to the procedure in the Sales area (see section "Down payments in Sales").

Non-deductible VAT#

In the down payment accounting, the Microsoft Dynamics 365 Business Central¹ Standard function of "Non-deductible VAT" is supported in down payment accounting.

In addition to enabling the "Non-deductible VAT" feature in the standard Microsoft Dynamics 365 Business Central¹, the setups described in the "VAT product posting groups and VAT posting matrix" section must be made in Down Payment Accounting.

As stated in the "Down-payment-plans" section, the "Non-deductible VAT %" is transferred from the purchase order to the rows of the down-payment plan and from here to the down-payment invoice and the other down-payment accounting documents.

What happens after the free trial#

What happens after the free trial? from KUMAVISION on Vimeo.