Extended Credit

Some suppliers will provide extended credit terms, where they deliver the stock, provide a tax invoice, but do not apply the usual credit terms. The terms are often three payments at say 30,60 and 90 days from delivery.

 

In the power equipment industry, suppliers such as Stihl, John Deere etc may provide this facility for units pre-ordered for “the season”.

 

If you want to process this transaction and have your supplier reports show your liability at the correct dates, and still claim the GST credit up front, use the following process.

 

First create a part number for Extended Credit – eg EXTCDT.  Tick the checkbox to make it a Zero Stock line, and with Tax code F (GST Free).  This should be appropriate because you have the tax invoice:  Only the payment terms are extended.

 

Note that Stihl use a similar process, and provide the “extra” invoices.  However their part numbers (9999 998 009 to take it off, 9999 998 0010 to put it back on) do have GST on them, so you will not be claiming the GST up front.

 

Process the supplier invoice for the goods as normal in Goods In.

Then create a credit note for the part number  EXTCDT for the full amount of the invoice on the same date.  Do this by using a negative quantity (-1) in Goods In.

Finally create forward dated invoices in Goods In to match the three payments dates, with the same part number, quantity 1, each one third of the amount (in this example).