VAT cash basis

When a vendor has an agreement with a customer to collect money, and the vendor sends a payment request to his bank to collect it, the request is made to the customer’s bank. Typically, the communication between the vendor and their bank is electronic.

Vendors send a manual or electronic remittance advice to their customers to indicate which invoices are being paid. Typically, the remittance advice includes invoice numbers and invoice amounts.

France specifics

Cash basis VAT is more common for services. The status is normally determined by the invoice issuer, so for accounts payable this varies by vendor. The vendor is required to specify that VAT on payment is applicable. This may vary by invoice for the same vendor.

When an invoice is created, the VAT is posted to a suspense account. The VAT is then released at the point of payment.

With prepayment, VAT is paid before the regular VAT invoice is generated. Typically, a pro-forma invoice is used for this purpose. The pro-forma invoice includes the products and services that determine the VAT rates; however, the VAT is not normally shown on a pro-forma invoice.

How Infor meets this requirement

In SyteLine, the cash basis VAT is known as transfer VAT, and is managed through the Bank Reconciliations form.