Payables Cash Accounting
In some areas, taxes and other 3rd party liabilities are not truly payable until the customer remits payment. We refer to this as "payables cash accounting". This practice should be contrasted with "payables accrual accounting" in which the liability is realized when the bill is created (as opposed to when it is paid).
Value Add Tax (VAT). VAT is a form of taxation common throughout the European Union. It is a common practice to only book the VAT payable when the customer remits payment. This means that most European implementations will use the functionality described in this section.
If your organization does not practice payable cash accounting, you may skip this section as accrual accounting is the system default. If you practice payables cash accounting, the contents of this section describe how to configure the system appropriately.