"credit refill" invoicing?

[Remitur]

Hello.

I see that clients can make payments, referred to no particular invoice, and the related sum is managed by Blesta as "credit", that the user can use to pay invoices.

But what about the invoice issuing of these payments?

In many countries, a company needs to issue an invoice whenever it receive a payment... even if the payment is no referred to any particular selling operation, and is available for future payments.
So, some kind of invoice issuing for this kind of operation should be provided in Blesta (and maybe it's yet somehow possible, but just I have not yet understood how to do it...)

  

 

[Paul]

On 7/27/2021 at 1:04 AM, Remitur said:

Hello.

I see that clients can make payments, referred to no particular invoice, and the related sum is managed by Blesta as "credit", that the user can use to pay invoices.

But what about the invoice issuing of these payments?

In many countries, a company needs to issue an invoice whenever it receive a payment... even if the payment is no referred to any particular selling operation, and is available for future payments.
So, some kind of invoice issuing for this kind of operation should be provided in Blesta (and maybe it's yet somehow possible, but just I have not yet understood how to do it...)

  

 

Where can we find official government documentation on this?

The problem is this:

Let's say a client makes a $100 payment for credit. If we invoice for the credit, the amount would be applied to the invoice, and there would no longer be a credit. If on the other hand, the credit is both invoiced and remains as an account credit, then at a later time a client receives $100 worth of invoices and the credit is applied to those invoices, the initial $100 credit has been applied to $200 worth of invoices. Additionally, the client may be able to submit this to their tax authority as a $200 deduction.

How do you reconcile that?

[Remitur]

1 hour ago, Paul said:

Let's say a client makes a $100 payment for credit. If we invoice for the credit, the amount would be applied to the invoice, and there would no longer be a credit. If on the other hand, the credit is both invoiced and remains as an account credit, then at a later time a client receives $100 worth of invoices and the credit is applied to those invoices, the initial $100 credit has been applied to $200 worth of invoices. Additionally, the client may be able to submit this to their tax authority as a $200 deduction.

How do you reconcile that?

it's a different way to manage prepaid credit.

A common way to manage it in many european countries, respecting VAT laws, is the following:

- customer buys 100 of credit; I invoice 100 + 20% VAT, customers pays 120, and has 100 of available prepaid credit

 - customer buys service A , priced 10
I deduct 10 from his credit, process the order, and (if required by local laws) I issue this invoice:
service A              10
prepaid credit:     -10
subtotal:               0
VAT 20%:              0
Total:                    0
(if local laws do not require a "zero value invoice" to be issued, I can send to the user just a receipt/note/mail message/whatsoever, just to keep note of how his credit was spent)

- customer buys service B, priced 110
I deduct all his remaining credit (90), and issue following invoice:
service B             110
prepaid credit:    -90
subtotal:              20
VAT 20%:               4
Total:                   24
So user pays 22, and I go on releasing his service...

Cross checking:
- the user did two payments: 120 and 24 (total 144)
- I issued two invoices: 120 and 24 (total 144)
- I released two services, valued 110 and 10: total 120 (and 120 + VAT = 144)

 

[Paul]

How do you get away with not paying VAT tax on both the original invoice for the credit, and the invoice for the credit consumption? It looks like you're simply not charging VAT on the portion of the service invoice that was paid with prepaid credit, but this doesn't seem like a very elegant solution. An invoice paid by credit would essentially be tax exempt, or partially tax exempt. At the time an invoice is generated, it does not know how it will be paid. Is the tax on your invoices edited/adjusted when they are paid, based on how much prepaid credit is applied to them? This would violate regulations in many countries that do not allow invoices to be modified after they are created. Also, what if the VAT rate changes between the time the prepaid credit is made and the service invoice is raised? Say it's 18% when the credit is made, and 20% when the service invoice is created.

If an invoice-like document must be sent when a prepaid credit is made, this seems more logical:

1. When a credit is made, create a new type of invoice.. maybe it's called "credit invoice" or something, to distinguish it from a normal invoice.
2. Do not charge any tax at the time the credit is issued.
3. When credit is applied to a service invoice later, calculate the tax rate like normal an assess the tax then.

This avoids the problem with duplicate amounts appearing in invoice reports, because a different type of invoice is generated for credits, it's not the same. It avoids the issue with the tax rate changing, because it's only assessed when it's applied to a real invoice. And, it avoids having to edit/change an invoice on the fly to account for taxes that were paid with the prepayment.