Cash and payment terms, in formulas
A sale invoiced in December and paid in January counts in December's revenue, but in January's cash. Fiplan runs the sale through trade receivables and the purchase through trade payables, at the pace of the payment term entered on the line.
Notation
- the payment term entered on the line, in days (0 to 365)
- the shift, in whole months
- the month of the invoice
- the amount excl. VAT and the VAT of the line in month
- the deductible VAT on a purchase
- trade receivables (400000) and trade payables (440000) at the close of financial year
- the effect of payment terms on cash at year-end
The shift
Year-end
(1): a month counts 30 days, and any month started counts in full — 31 days make 2 months. The result does not change: the sale and the expense stay attached to the month of the invoice, and the VAT remains due or deductible that month (see VAT in formulas). Only the date of the bank movement moves. The payment term is entered on revenue, supply and general expense lines.
Numerical application · Boulangerie Dupont, 2027
A variant of the running example: customers pay at 30 days, suppliers are paid at 45 days. Sales of €18,000.00 excl. VAT per month (€19,080.00 incl. VAT), purchases of €5,760.00 excl. VAT (€6,105.60 incl. VAT).
The December sale is collected in January 2028; the November and December purchases are paid in January and February
- Cash at 31 December 2027 goes from €133,416.58 to €126,547.78; the 2027
net result stays at €83,076.13.
The journal entry
| Side | Account | Description | Amount |
|---|---|---|---|
| Debit | 400000 | Customers | 19,080.00 |
| Credit | 700000 | Sales and services | 18,000.00 |
| Credit | 451000 | VAT payable | 1,080.00 |
| Side | Account | Description | Amount |
|---|---|---|---|
| Debit | 550000 | Credit institutions — Current accounts | 19,080.00 |
| Credit | 400000 | Customers | 19,080.00 |
| Side | Account | Description | Amount |
|---|---|---|---|
| Debit | 600000 | Purchases of raw materials | 5,760.00 |
| Debit | 411000 | VAT recoverable | 345.60 |
| Credit | 440000 | Suppliers | 6,105.60 |
This January purchase is paid in March 2027. Without a payment term, the same sale and the same purchase would go straight through the bank, in the month of the invoice.
Try it yourself
Change the payment terms: formulas (1) to (5) are recalculated
A 12-month financial year 2027, sales and purchases at 6%. The block gives two lines to the engine (generateJournalEntries, then computeJournalBalanceSheet) and reads the balances of accounts 400000, 440000 and 550000 that it returns, with and without payment terms.
Source
Minimum standard chart of accounts (plan comptable minimum normalisé / minimumindeling van een algemeen rekeningenstelsel): accounts 40 (trade receivables) and 44 (trade payables).
Fiplan conventions, declared in the code (journal-engine.ts): the payment term converted into whole months of 30 days, any month started counted in full; VAT recognised on the invoice date; no payment term for an investment.