I have a client who operates a computerised retail invoicing system which doesn't allow a sales invoice to be raised without a corresponding stock figure to set the invoice against.
However, on occasions a customer may order goods which are, for example, a special order and are therefore not in stock at the time of order, so no invoice can be raised, although the customer pays in advance.
I can set up a quote for the customer to bring the transaction into Solar, which I appreciate can be converted into an invoice when the goods are received and dispatched to the customer.
The problem is that the receipt of the money cannot be allocated against the order and will need to be shown on the balance sheet as an advance payment.
As the client declares VAT when the money is received how can I record this money to declare the output VAT?
I presume that the conversion of the quote into the invoice will enable the money received to be correctly allocated but will the output VAT then be recorded in the VAT liability account at the date of receipt of the money, which may be in a previous quarter?
Hi Russell,
The situation you described can be handled by creating a Money Received
transaction with the Type set to 'Advance Payment'. This transaction will
appear on your VAT return in the VAT period when you received the money -
the rate used will be 20%.
Later, when you create the invoice Solar Accounts will ask if you want to
allocate the advance payment amount to the invoice - click 'Yes'. On the
VAT return figures for the VAT period covering the invoice, you will see
that the original advance payment VAT amount is reversed, then the VAT for
the invoice is applied - in most cases this simply cancels out, so it has
no effect of that return (as you would expect, since the VAT has already
been accounted for in the previous period when you recorded the advance
payment)
