[Advacs-discuss] Prepayments

[Helmut Wollmersdorfer]

According to a current discussion on sql-ledger-users@sql-ledger.org I 
want to write down the problems concerning prepayments. I hope we can 
avoid the weaknesses of other ledgers.

Requirements:

1) Prepayments of customers are liabilities and have to be reported 
under liabilities in the financial report.

2) Prepayments to vendors (or other business partners) have to be 
reported under the debit side of the financial report. This has to go to 
different accounts (in Austria), e.g. "Prepayments for fixed assets", 
"prepayments for goods and services", "other outstanding money" (e.g. 
deposit for office or car rental, prepayment of wages, prepayment of 
taxes etc.)

3) Private law (in Austria) says, that debit and credits to the same 
business partner can only be balanced, if the payment terms match at 
date of balancing. E.g. if a customer prepaid EUR 100,- at 2004-07-01 
for contract B, and has an open item of EUR 100,- for contract A to pay 
on 2004-08-01. We go bankrupt on 2004-07-15. This means, that the 
customers has to pay _full_ EUR 100,- on 2004-08-01 for contract A, and 
gets back only a percentage of the prepayment after some time, e.g. 20% 
in 2006.

4) A business partner can be vendor and customer, e.g we buy materials 
from him, and we deliver our products to him. According to contract, 
balancing between vendor and customer account can be agreed.

5) According to contract money transfer through a third party can be 
agreed. E.g. if somebody builds a large building, he has large 
VAT-returns on his tax account, and his suppliers must pay VAT to the 
tax office. Thus it is sometimes usual to agree transfers via the tax 
office.

6) From 1) to 5) follows, that open items in the same business partner 
account should go to different parts of the balance sheet, depending on 
their sign.

7) From 1) to 6) follows, that AR, AP and Cash modules need a logic, to 
provide the convenience of open item support in all cases of prepayment, 
overpayment, invoice adjustments after payment, return goods, deposits, 
transfers, and even the combination of them.

Helmut Wollmersdorfer