Accounting

Purpose: To make the necessary transactions at the start of a Hire Purchase contract.

General: There are essentially two types of lease – 1. Finance lease – where you are effectively borrowing finance to pay for goods you will own at the end of the finance; and 2. Operating lease – where you effectively hire the goods and pay for the use but never own the goods.

Hire Purchase is a type of finance lease.

With Hire Purchase you usually receive an invoice for the goods and an HP agreement with details of the purchase price, the VAT element, the deposit , the net amount financed, the terms and monthly repayments and details of the final option to purchase amount.

The Accounting Process: Firstly, we deal with the invoice.

1. Create an account in the purchase ledger for the supplier of the goods.

2. Post the invoice. If a vehicle, post the cost to Fixed Assets vehicles and post any non capital items such as road fund licence to motor expenses and fuel supplied to Fuel. For electric vehicles there may be a grant to take care of as well. In this process you will take care of the VAT as well. For other items find the appropriatefixed asset account.

Secondly, we set up a HP liability account in the Current Liabilities section of the nominal ledger. If you are likely to have more than one HP agreement create separate accounts for each.

Thirdly, we post a credit to the Supplier account to clear it and transfer the amount to the HP liability account. Match these items to keep the account tidy. Code this as VAT code N if posting a dummy credit note or you can create a standard journal entry.

Fourthly, post any deposit paid to the HP liability account.

Fifthly, create a HP interest account in the finance expenses section.

Finally, work out the monthly capital repayment = Balance on HP liability account (amount financed) divided by number of repayments. The difference between this figure and the monthly amount repayment shown on the agreement is the HP interest. When each repayment is made you will need to split the amount and post the capital amount to the HP liability account and the interest to the HP interest account.

The final payment will include the option to purchase – this is a finance cost and should go to finance charges in the finance expenses section. There will be VAT on this charge.

Purpose:
It is now common practice to use email to deliver and receive standard business documents – e.g. invoices, credit notes, order acknowledgements, customer statements etc. Your Prelude Desktop product allows you to automatically email specific documents to customers and suppliers as well as print any documents to standard format files which you can then attach to an email.

Preparation – Settings:
Ensure that there are no other users on the system.
Configure the system SMTP settings – for Prelude Desktop products see General Parameters – Email and for Prelude Cloud see Parameters Form – Company Details .
Configure the customer and supplier Accounts to which you want to automatically email specific documents – see Customer Account – Miscellaneous Page, Supplier Account – Miscellaneous Page

Preparation – Message Body
With no further configuration, your product will now automatically email your chosen documents to your chosen customers with a generic preset message in the body of the email. You may wish to include your own generic message in the email body and your software allows you to do this. This requires some maintenance but can be a useful marketing tool. The message can be specific within each system company and can be either HTM or simple text format.
Prepare your desired message and save as a file named EBODY.HTM (for HTM format) or EBODY.TXT (for simple text format).
For company-specific messages, save this file to \Root Directory\Data.0xx (where xx is the company number) – all emails from this company will contain the EBODY.~ file contents in their message bodies.
For system-generic messages, save this file to \Root Directory – emails from all companies will contain the EBODY.~ file contents in their message bodies (except any companies with their own EBODY.~ file)
The system uses the following order to detect an email message body file. It applies the first it finds and if none are found, the generic preset message is used:
\Root Directory\Data.0xx\EBODY.HTM
\Root Directory\Data.0xx\EBODY.TXT
\Root Directory\EBODY.HTM
\Root Directory\EBODY.TXT