Accounting, Taxes, and VAT for Installment Bills

Each installment billing invoice carries its own information for accounting, contract liability, discounts and surcharges, and tax records. The system copies the default information, except for tax amounts, from the template for installment billing invoices to the individual installment invoices. An installment invoice functions much like a regular invoice.

When you generate an installment invoice, you charge value-added tax (VAT) for the amounts that are due on that invoice at the rate that is applicable for the tax point and date for the goods or services that are included on the invoice. However, no matter which format you use, the same basic rule is always applied: Calculate VAT on the amounts that appear on the invoice.

VAT Example

If you issue multiple invoices, one for each installment, the system calculates VAT on the installment amount because this is also the invoice amount.

Invoice 1: Due 30 March 2000.

Line Number	Description	Amount	VAT Rate	VAT Amount
1	Books	500.00	Zero	0.00
2	Stationery	250.00	Standard	43.75
3	Computer	3500.00	Standard	612.50

Net Amount = 4,250.00

VAT Amount = 656.25

Total Amount = 4906.25

Invoice 2: Due 30 April 2000.

Line Number	Description	Amount	VAT Rate	VAT Amount
1	Books	250.00	Zero	0.00
2	Stationery	125.00	Standard	21.88
3	Computer	1750.00	Standard	306.25

Net Amount = 2125.00

VAT Amount = 328.13

Total Amount = 2453.13

Invoice 3: Due 30 May 2000.

Line Number	Description	Amount	VAT Rate	VAT Amount
1	Books	250.00	Zero	0.00
2	Stationery	125.00	Standard	21.88
3	Computer	1750.00	Standard	306.25

Net Amount = 2125.00

VAT Amount = 328.13

Total Amount = 2453.13