Enter the payment with sales order details

For the UK, when you enter a full payment with a sales order with settlement discount, the net and VAT discounts are automatically applied and used to calculate the payment amount. In this case there is no need to process an adjustment to account for the VAT discount.

Note: You must select Full Payment when entering the payment details. If you just enter the payment amount, it's treated as a part payment and the discount is not applied.

Note: In Ireland, VAT is calculated on the full value of the invoice regardless of any settlement discount.

For more information see Settlement discounts.

You don't need to select this if you're going to raise an invoice for the order more or less straight away, as the payment and the invoice will have a tax point date in the same period.

The value of the payment is recorded with the order, but payment is not posted to the VAT return. The order is processed in the usual way; the goods are despatched, the invoice is printed, and then posted. When the order is posted, the payment is posted at the same time. This updates the customer's account, adds the VAT to the VAT return and allocates the payment to the invoice. This also sets the tax point date for to be the same as the invoice date.

As the payment is linked to this order, you can't create an invoice from the order for less than the value of the payment. If the payment is just a deposit then this is fine, as the total goods value will more than the payment amount. If you receive full payment for the order, then you'll have to despatch all the goods before you can raise an invoice.

Select this when you need to include the payment amount on the VAT return before despatching the goods. This allows you to despatch the goods and invoice the customer in the usual way whilst also including the VAT on the VAT return. You can also partially despatch and partially invoice the order.

This process creates a special VAT invoice and a separate goods invoice for your customer.

1. Enter the order, enter the payment, select Invoice Payment immediately and Save.

   A VAT invoice is created and printed. This shows the total goods and VAT values but indicates that it's for VAT purposes only.

2. Post the VAT invoice. This creates the tax point date.

   • The payment is posted to the customer's account.
   • The payment value is shown as Declared on the order.

   • The VAT invoice is posted to the customer's account, the VAT return and to the Prepayment nominal account, as follows:

     Nominal Account	Debit	Credit
     Prepayments		Net
     VAT		VAT
     Debtors Control	Gross

   • The invoice is allocated to the payment.
3. Despatch the goods as usual.

4. Print an invoice for the goods as usual and send this to the customer.

   This shows the goods less the value of the payment. If the order was paid in full, the invoice value will be zero.

   This has a new invoice number, so you'll always have an additional VAT invoice associated with this order.

5. Post the goods invoice.

   • The customer's account is updated.

   • The net value is reversed out of the Prepayments account and posted to the correct sales account.

     Nominal Account	Debit	Credit
     Prepayments	Net invoice value
     Sales account		Net invoice value

What if there are still goods outstanding?

If the payment was a deposit, then the VAT invoice will only be for the amount of the deposit. Any remaining goods will be included on the goods invoice and will be outstanding on the customer's account, ready for you to allocate the remaining payment when you receive it.