How To: Financial Setup for EC Customers
To set up an EC customer the following areas need to be configured (this example setup assumes the EC Customer uses the Euro):
- In the
[ Customer | General ]tab:- EC Company checkbox should be ticked
- Company pays tax checkbox should be ticked (except in exceptional cases);
- Tax Ref - if you're sending goods to someone who is genuinely registered for VAT in the destination EU country then, provided you meet certain conditions, you can zero-rate the supply for VAT purposes, see How the Tax Ref affects the EC Tax Register. In such cases you should enter the customer's VAT number here.
- In the
[ Customer | Financial ]tab:- Currency - set to Euro.
- In the
[ System Data ]screen:- Countries need to be configured (see note below);
- Ensure that "Currency" and "Conversion Rates" have been setup.;
- Check that VAT rates set in the Tax Rates table are current;
- In the
[ Accounts | Nominal Accounts | Nominal Accounts ]tab:- Where necessary (e.g. customer pays in Euros) create a new bank account to match the currency set on the Customer screen's Finance tab.
- In the
[ Promotion | Price Lists ]tab:- Create a Euro Price List;
- Add the Euro Price List to the Euro Customer.
Note: a stock item can be added to a sales order for a non-sterling customer without the use of a Euro Price List and the system will use the current conversion rates to calculate the price. However, this will mean that there is no consistent price used if the conversion rates change often, so it maybe more practical to use a Euro Price List.
- In the
[ System Values | Accounts | General | Sales ]:- "Charge all transactions in native currency" (normally not ticked on new databases). If ticked then when charging a credit card all transactions with the bank are charged in GBP, converting from the customers' currency as required.
- "VAT based on delivery address" (normally ticked on new databases). If unticked then the VAT is calculated based on the customer's country and not the delivery address.
- In
[ System Values | Sales | Pricing | Pricing ]:- "Forces Sales Order Lowest Price" checkbox must not be ticked (normally ticked on new databases).
- Sales Summary can be used to report on sales by country. However, please remember to read the information in regards to setting Sales Nominal Account types as you may also wish to set these to country.
Important Points to Note
Countries
Khaos Control is normally supplied pre-configured with the ISO-3166 countries and a UK zone (comprising United Kingdom, Guernsey, Isle of Man and Jersey) already present. Flags are set against EC countries to indicate whether:
- "VAT applies" (Tax) and
- The country is to be treated as an "Other Member State" (EU) for VAT purposes.
This should only need changing should you need to separate out territories (e.g. IC Canary Islands), zone countries together (e.g. EU European Union) or, for example, create England, Wales, Scotland and Northern Ireland as separate countries.
Running Health Check from the main screen's File menu should reveal any significant errors in the Country table.
Customers
- An existing 'Sterling' customer cannot have their currency changed if they have activity recorded against them: a new Customer will need to be created.
- Khaos Control does not validate the VAT number: any characters entered into the Tax Ref field will be treated as a valid VAT number.
The European Commission maintain an online validation tool that you may find useful.