If the tax on the prepayment needs to be declared, create a zero-amount customer invoice for the prepayment and only include the applicable taxes. The taxes for the zero-amount invoice are then included in your tax declarations, and the invoice does not impact your customer’s AR balance.

Add the Reconciliation Key field to the Customer Invoice functions using Design Mode and record a reconciliation key for the tax invoice so that you can easily find and reconcile it later.

Before you issue a final invoice to the customer, you can record multiple prepayments and multiple corresponding tax invoices.

When your company ships goods or provides services, you send the final invoice to the customer and record the invoice using Customer Invoice Create. As with the tax invoice and prepayment, assign the same reconciliation key so that you can easily find the invoice later.

Since this invoice is for the whole tax amount, you must reverse the original tax invoice created for the prepayment.

When you have recorded the final invoice for the customer in Customer Invoice Create, you then reverse the tax invoice that you created previously.

See Reversing Customer Invoices.

Use Open Item Adjustment Create to adjust the final invoice with the prepayments. To maintain the relationship between all documents involved in the reconciliation process, you must also add the closed tax invoice and the reversal invoice to the open item adjustment. Using Open Item Adjustment, you can use the Reconciliation Key field to search for all documents in the work flow. To track the corresponding taxes, you also need to include the closed tax invoices based on prepayments and the reversal invoices as well.

For closed items, use the Starting from Year and Period filter to narrow the search results. You need to include closed items to retrieve the reversed invoice.

The adjustment must include the prepayments, the tax invoices based on the prepayments, the reversed tax invoices, and the final invoice.

The AR Prepayment Tax Reconciliation report contains output on which you can base your prepayment tax reconciliations. The report lists all transactions that meet the other search criteria. The data is grouped by daybook for each open item adjustment.

The search criteria are:

Specify the currency code for which you want to run the report.

Choose the entity for which you want to run the report. The Entity field is mandatory.

Specify the prepayment reference for which you want to run the report.

Specify the reconciliation key for which you want to run the report.