Sage Help - Problem with Payments on Account

[BeccaOnline]

We moved from Quickbooks to Sage in March. Today I have just tried to file our first VAT returning using Sage and discovered a mini-nightmare!

We have three services (all similar) managed through one company and one Sage account. We have a service which is transaction intensive, low value consumer based sales. Instead of separating out all the customers (several thousand) into Sage, I created one customer for the whole service. We are on a cash accounting scheme.

Transactions are kept separated on a spreadsheet, and at the end of each period I add up all the transactions (some standard rated, some zero rated) and create one invoice for all customers, one line standard, one line zero. Customers pay funds in advance, so may have a credit balance.

As we receive payments from credit cards deposited into our bank account every day, I have been recording payments on account for the 'single customer' each day, setting the tax code as T9 (non-vatable) as I do not know what the VAT element would be on those particular funds until they are spent.

The problem is I now have an oustanding invoice for this customer, and around 60 payments on account of varying values. I tried to simply pay this invoice using the credits, but it would not let me as there is a clash of tax codes. I also tried to change some of the tax codes on certain payments to T1 and T0 but still have the same problem.

Could somebody advise if there is a solution to this problem, or perhaps if I've been going about it all wrong and there is a much simpler way of accounting for these funds?

[David Griffiths]

If you have cash sales, you don't need to raise a customer invoice at all, or open a Cash Sales account in the customer module.

When the money comes in, record it as a bank receipt (as opposed to a customer receipt) and credit it to code 4000 - or whatever code applies to the sales in question. That cuts out the sales ledger altogether, so there are no payments on account to worry about in terms of tax codes.

Of course, you'll still need to allocate these cash sales between the various VAT codes. When you say that you deal with them "at the end of each period" do you mean at the end of each VAT period - once every three months? If that's the case, it seems to me that's far too long, and you should look at posting them more frequently, ideally daily, or at least weekly.

I'm also not sure what you mean by some customers having a credit balance - does that mean that this is still within the single customer mega-invoice? The above system won't cope specifically with that, but as far as I see things neither does the current system. You can deal with the situation at the end of your year by making an accounts adjustment for the prepaid sales, but for VAT the tax point is when you get a payment, even in advance, not when the service is rendered.

[Jenni384]

I agree with David, use the Bank Receipt function, and you won't have anything to tally up - you keep records for each customer on a spreadsheet anyway, so it's fine to enter everything into Sage as simply as possible :)