Proforma Invoice: Items Section

Use this section to add and define items to be sold.

Items section comprises 2 tabs, the Goods tab, and the Services tab.
 
Under the Goods tab, you can add one or multiple goods (items of the item types Inventory, Fixed assets or Non-inventory) and enter information about them. Also, you have to indicate whether the invoice functions as a delivery, specify shipment terms for added goods and select a warehouse from which those goods are to be shipped. To define the mentioned above details, you have to fill in the following fields:
 

Field/Option

Used for

Warehouse

Select a warehouse from the list of warehouses from which the goods for sale will be shipped.

  • The warehouse is provided automatically once you select a sales manager being retrieved from the manager's employee record created in the Employee directory. It is a warehouse set as a default warehouse from which the manager (an employee who performs duties of a sales or purchasing manager) sells goods. If no specific warehouse is assigned to the selected sales manager or no sales manager has been specified in the document, the default warehouse defined in My company settings will be provided in this field. Still, you can select an alternative warehouse instead of the one that is assigned to the sales manager if necessary.
  • It is a required field if at least one item has been added. In this case, if you delete this autocompleted warehouse and do not select an alternative one, you will not be able to save the document. 
  • If multiple warehouses are not allowed in the system (Multiple warehouses option is turned off in My company settings), the Warehouse field will not be displayed on the form. All reservations or reduction of the in-stock quantity of goods will take place for the default warehouse selected in My company settings. For more details about defining inventory management settings, see My Company Settings: Preferences Tab.

Delivery is separated from invoice 

This option enables you to manage delivery and invoicing as two separate processes if the time of the delivery does not coincide with the time when the invoice has been issued. Turn on this option if your approach to invoicing presupposes the availability of the delivery as a distinct document preceding the invoice. Or else, if you want to perform the delivery and invoicing as a single operation, keep this option turned off.

In Codejig ERP, invoices by default carry out all sales-related transactions simultaneously functioning as deliveries. In this case, the invoice reduces the quantity of goods in stock, recognizes the income earned from the sale of goods/services, calculates the cost of goods sold, increases accounts receivable and, if required, incurs output VAT. As a result, delivery documents become redundant and should not be created. 

However, if a delivery document has already been issued and, as a consequence, it precedes your invoice, the invoice has to be created as a standalone document that does not perform the delivery function. In this case, it is the delivery document that writes off goods to be sold from the warehouse from where goods have been shipped, but it is the invoice that recognizes the income, calculates the cost of goods sold, increases accounts receivable and, if necessary, incurs output VAT.   

Also, there may be circumstances that will prompt you to create the invoice before the actual delivery. In this case, the created invoice, in addition to  recognizing the income earned from the sale of goods/services, calculating the cost of goods sold, increasing accounts receivable and, if required, incurring output VAT, will make reservation on the indicated quantity of goods and will preclude the possibility of the sale of those goods to other customers. The delivery document created afterward will cancel the reservation of goods and will reduce the quantity of goods in stock. 

If the Use separate document for sales delivery option is turned off in My company settings, the Delivery is separated from invoice option is unavailable in invoice documents, as the creation of delivery documents is permanently forbidden and invoices always function as deliveries. 

Incoterms

Select the Incoterms which are relevant to your business situation.

  • Incoterms that are usually used for the given customer are provided automatically once you select the customer being retrieved from the customer record created in the Company directory. However, you can change the autocompleted Incoterms if necessary. 

Destination

City to which goods are to be transported. 

  • Destination to which goods are usually delivered for the given customer is provided automatically once you select the customer being retrieved from the customer record created in the Company directory. However, you can change the autocompleted destination if necessary.

Method of delivery

 Select a method of transporting goods to your customer from the list of delivery methods added to the system or create a new method of delivery. 

  • Method of delivery that is usually used for the given customer is provided automatically once you select the customer being retrieved from the customer record created in the Company directory. However, you can change it if necessary.
 
Under the Services tab, you can add one or multiple services (items of the item types Service) and enter information about them. No warehouse or shipment terms have to be selected for services, as they are not subject to inventory management and are rendered, not shipped. Thus, the mentioned above fields are absent under the Services tab. 
 
However, Codejig ERP also offers invoicing options that are pertinent only to services. Usually, the invoice is issued at the time the services are rendered. Thus, the invoice makes journal entries that recognize income received from the sale, increase accounts receivable and incur output VAT if any. However, often, you have to issue invoices for services that have already been provided or will be provided in the future. This scenario prompts the necessity to perform the income recognition and the increase in accounts receivable as two distinct operations. To accomplish this task, the document foresees two options: Deferred income for monthly write-off and Provision of services is separated from invoice.
 

Field/Option

Used for

Deferred income for monthly write-off

Turn on this option if you issue the invoice for services that will be provided in the future (booking the hotel room, paying the office rent for the next year).

After that three fields will be added (First month, Usage period, Last month), where you may set the initial and closing dates for such services. For example, for the office rent for one year, set May 1, 2018, and February 28, 2019, and for the hotel room booking for one day, set the April, 1 in both fields.

The invoice will debit the customer liabilities accrual accounts and credit the prepaid income accrual along with the VAT liabilities, if necessary. At the same time, the income accrual and decrease of prepaid income will be made automatically when the Deferred income and expenses write-off document will be compiled for respective periods.

Keep the option turned off if the invoice is issued for the services provided now or earlier.

Provision of services is separated from invoice

Turn on this option if you issue the invoice for services that were provided earlier. In such case, the fact that services were provided, together with their number and the approximate cost is established in the Delivery document. Such approach is suitable for transport, consulting and other services that involve a time gap between the services being provided and invoice being issued to the customer, or there is one accumulative invoice issued, that includes all the services provided for the customer for a certain period.
In this case, the Delivery document defines a certain accrued income on debit and at the same time defines the sales income on services provision on credit.
The invoice that is issued for the services provided earlier decreases the accrued amount and accrues the debt on debit, and a VAT loan if necessary. At the same time, invoice corrects the accrued income, if the cost of services stated in the invoice differs from the one calculated in Delivery document earlier.
Keep the option turned off if the invoice is issued for the services provided now or that belong to the category of Deferred income and expenses write-off.

 
Note: Options Deferred income for monthly write-off and Provision of services is separated from invoice cannot be turned on at the same time: one option being turned on blocks the other option.
You add both goods and services as a line item.
 

Total goods (pic)

Displays the total number of line items added under the Goods tab.

 

Total services (pic)

Displays the total number of line items added under the Services tab.

 
The line item is a line structure that contains an item and item details. The line item is comprised of a number of fields, such as quantity, price, net amount, and so on.
 
Line item fields are almost identical for goods and services, except some fields pertain only to goods or services. 
 
To add a new line item, click the +Add new button above the table used for listing added line items. 
 
If you add a line item, you have to fill in all required fields of this line item to be able to save the document. If you fail to fill in all required fields, you can also delete the line item to be able to save the document.
  

Line Item Fields

 

Field

Used for

Good/Service

Select a sales item (good or service) from the list of previously created items or create a new one.

If you select an item from the list, certain item details will be provided automatically as the system will retrieve the relevant data from the respective item record, a base price list for the item and other related documents.

  • It is a required field. If you do not select an item, you will not be able to save the document.

Unit

A unit of measurement, whether it is a piece, a kilogram or a liter, etc. 

  • A base unit of measurement specified for the item is provided automatically.
  • If several units of measurement are defined for the item forming the item's set of measurement units, you can select a unit from the set that is most suitable in a particular case. However, this unit will be used only for displaying quantities in the document, all inventory and accounting transactions will use the base unit of measurement into which the selected alternative unit will be converted according to the specified conversion ratio.
  • It is a required field. If you delete the unit and do not select an alternative one from the set, you will not be able to save the document. 

Available

The total quantity of the item that is available for sale. It is the quantity of the item you currently have in stock in the selected warehouse and expect to receive from vendors excluding the reserved quantity.

  • If you select an alternative measurement unit for the item, the total quantity available for sale will be automatically updated.  
  • If you select an alternative warehouse, the total quantity available for sale will be automatically updated.
  • This quantity is provided automatically and you cannot override it.
  • The field is absent for services.

Quantity

A number of items you want to sell.

  • The quantity is defined for the selected unit of measurement.
  • Quantity for sale can exceed the number of items available for sale if you allow negative balances or sale of reserved items in My company settings.

Price

The price of one item defined for the selected unit of measurement. The price is set in the currency of the invoice.

  • The price is retrieved from a price list containing the most recent item price in the currency of the invoice. However, you can change this price if necessary. For more information about price lists, see Price List.
  • The price is either VAT inclusive or VAT exclusive depending on whether the Price includes VAT option is turned on or turned off. When you activate or deactivate this option, the price is recalculated.  

VAT

Select a VAT rate at which the item is to be charged VAT.  VAT rates displayed are filtered based on a country in which you have to charge VAT on the item. As a rule, it is a country where your company is based. 

  • VAT rates are retrieved from the VAT rate directory.
  • If you sell goods/services within the country of your registration (domestic supplies), the standard rate, reduced or exempt rate is suggested automatically depending on the selected item.
  • If you sell goods/services in other EU and non-EU countries (intra-community supplies or export), the selection of VAT rates suggested for use depends on the place of supply of your goods and services that is determined based on several factors. As a general rule, if you sell goods or services to customers outside the EU or to a VAT taxable person in another EU country, Export VAT rate is automatically set for all added goods and services. If you sell goods or services to a non-taxable person in another EU country, a domestic VAT rate is suggested for use, a relevant rate being determined according to the taxation rules applicable to domestic supplies.  
  • Also, Codejig ERP can determine the place of supply of telecommunications, broadcasting and electronic services and then suggest relevant VAT rates according to special cross-border VAT rules. If you provide the mentioned above services to a non-taxable person in another EU country, VAT rates applicable in a country of your customer are selected. However, you can change any of the autocompleted rates if necessary. 
  • It is a required field. If you delete the autocompleted rate and do not select an alternative one, you will not be able to save the document.
  • The field is unavailable if your company is not identified as a VAT payer by the system. For information how to set up your company as being registered for VAT and enable required VAT-related functionality, see VAT Number. 

Net amount

It is the computed field.

Net amount - the total price of the goods or services excluding VAT charges.

  • If the price of one item is VAT exclusive, the calculations are the following:

Price x Quantity

  • If the price of one item includes VAT, the net amount is calculated in the following way:

Total amount / (1 + VAT rate / 100 %)

  • The field is unavailable if your company is not identified as a VAT payer by the system. 

VAT amount

It is the computed field.

VAT amount - VAT contained in a total amount which is inclusive of VAT.

  • If the price of one item is VAT exclusive, the calculations are the following:

Net amount x (VAT rate / 100 %)

  • If the price of one item includes VAT, the VAT amount is calculated in the following way: 

Total amount - Net amount 

  • The field is unavailable if your company is not identified as a VAT payer by the system. 

Total amount

It is the computed field.

Total amount -  the total amount of line item goods or services in the specified currency including VAT.

  • If the price of one item is VAT exclusive, the calculations are the following:

Net amount + VAT amount

  • If the price of one item includes VAT, the total amount is calculated in the following way:

Price for one item including VAT x Quantity 

Note: Although net amount, VAT amount and total amount are computed automatically based on the price and quantity indicated as well as on the selected VAT rate, you can override the computed values triggering the update of other values.
Advanced line item fields
 
Not all line item fields are displayed by default. To enable such fields, you have to turn on the extended mode for line item by clicking the More button above the list of items.
On enabling the extended mode, the following fields appear:
 

Field

Used for

Description

Add a description of the sales item.

  • The field is autocompleted; item description, if provided, is retrieved from the item record. However, you can modify the description if necessary. 

Inventory Account

An inventory account in which the item was originally recorded.

If the invoice incorporates functionality peculiar to delivery documents (no delivery function is turned off), the inventory account is credited with the cost of the total quantity of the item to be sold that is calculated according to a default inventory valuation method selected in My company settings. 

It is a contra account to the COGS account that is debited with the cost of the costs of goods sold.

If the invoice is not used as a delivery (Delivery is separated from invoice function is turned on), no transaction is made to the inventory account. There are two possible scenarios related to this particular case.

1) If the invoice is preceded by a delivery document, the latter writes off goods from the selected warehouse and the inventory account and makes a corresponding entry to the goods delivered account recording the cost of the total quantity of the item to it as a debit. Consequently, the invoice will make entries to the goods delivered account instead of the inventory account that will be debited with the cost of the goods sold. The Goods delivered account is specified in My company settings, under the Accounting tab.

2) If no delivery document precedes the invoice, but its creation is anticipated, the invoice makes entries to the goods delivered account (recording the cost of the total quantity of the item to be sold as a credit) and the COGS account (recording the cost of the total quantity of the item to be sold as a debit). 

  • The account is provided automatically based on an inventory account assigned to the item being retrieved from the item record created in the Item directory. However, you can change it if necessary.
  • It is a required field. If you delete the autocompleted account and do not select an alternative account of the same type, you will not be able to save the document.
  • The field is unavailable for services.

COGS Account

A COGS account to be debited with the cost of the total quantity of item to be sold that is recognized as a cost of the goods sold.

  • The COGS account is provided automatically being retrieved from the item record created in the Item directory. However, you can change it if necessary.
  • It is a required field. If you delete the autocompleted account and do not select an alternative account of the same type, you will not be able to save the document.
  • The field is unavailable for services.

Income account

A sales income account to be credited with the total amount calculated for the item (good or service) excluding the discount amount offered for the item if any and the VAT amount calculated for the item if your company is registered for VAT. It is a contra account to the receivables from customers account that is debited with the income amount. 

  • The income account is provided automatically for all added items being retrieved from the respective customer record created in the Company directory. In the customer record, an account for recording the revenue received from the sale of goods/services to the given customer has to be specified. This account is then copied to the invoice document and set for all invoiced items. If no income account is selected for the customer, the account is fetched for each individual item from its record created in the Item directory. In any case, you can change the autocompleted income account if necessary.
  • It is a required field. If you delete the autocompleted account and do not select an alternative account of the same type, you will not be able to save the document.

In stock

The total quantity of the item stored in the selected warehouse as of the document date.

  • Quantity for sale can exceed the in stock quantity (even if the in stock quantity equals zero) if negative balances are allowed in the system. Otherwise, if you try to sell items that are not in stock, you will receive an error message while trying to post the document.   
  • If you select an alternative measurement unit for the item, the in stock quantity will be automatically updated.
  • If you select an alternative warehouse,  the total quantity in stock will be automatically updated.
  • The field is unavailable for editing, you can only view the indicated amount being retrieved from the Inventory journal.
  • If you select an alternative warehouse section,  the total quantity available for sale will be automatically updated.
  • The field is absent for services

Expected

Displays the quantity of the item that is expected to be received from vendors in the future based on open purchase orders.

  • If you select an alternative measurement unit for the item, the expected quantity will be automatically updated.
  • If you select an alternative warehouse,  the expected quantity will be automatically updated.
  • The field is uneditable, you can only view the indicated amount being retrieved from the open purchase orders.
  • The field is absent for services.

Reserved

Displays the quantity of the item reserved by customers. The reserved quantity is deducted from the quantity of the item available for sale.

  • Reserved items are not available for sale unless you enable the sale of reserved items in My company settings. Then, a number of goods you offer for sale can exceed the number of items available for sale, and such accounting transaction will be accepted by the system.
  • If you select an alternative measurement unit for the item, the reserved quantity will be automatically updated.
  • If you select an alternative warehouse, the reserved quantity will be automatically updated. 
  • The field is uneditable, you can only view the indicated amount being retrieved from the open sales orders.
  • The field is absent for services.

Discount, %

Discount rate. A percent of an original price by which the item is discounted.

  • Discount rate specified for the given customer is provided automatically once you select the customer. However, you can change it if necessary. 
  • If you change the discount rate, values in the fields Discount amount, Net amount, VAT amount and Total amount will be recalculated and updated. 

Discount amount

Amount that is taken off of the item price. It is calculated according to the specified discount rate.

  • You can enter the discount amount manually. Then, values in the fields Discount rate, Net amount, VAT amount and Total amount will be automatically recalculated and updated. 

VAT rate, %

Displays VAT rate(in percentage) according to the chosen VAT type. The field is unavailable for editing and cannot be overridden.

  • The field is unavailable if your company is not identified as a VAT payer by the system. 

If you want to turn off the extended mode, click the Less button. After turning off the extended mode, advanced item details will persist.
 
Note: You can create your invoice based on all sales documents that precede it in the sales flow. The system will copy all data from a chosen sales document and transfer it to the invoice. As a result, all fields in the Items section of the invoice, except the fields Inventory account, COGS account, Income account, will be populated from the fields of the sales document. The mentioned above fields will be also autocompleted, accounts being retrieved from item records. For each good added, the inventory account, the COGS account and the income account will be automatically fetched from the respective item record, where the accounts been specified under the Accounting tab.  For each service added, the income account will be provided similarly. Also, you can change all autocompleted values if necessary. 
However, if you create the invoice based on the sales order and decide to 1) sell goods from a warehouse other than the one specified in the document based on which the invoice is created 2) sell or provide less than the quantity of goods/services reserved, reservation on the quantity left will not be canceled.  You can clear such reservations only with the aid of the Manual transaction document. 
 
More information