Prepayment and Final Invoices

Important: If you are using InvoiceOcean reports and files like JPK_V7, before issuing a prepayment invoice, create an Estimate. From the Estimate view, in the top menu, select More options > Create prepayment invoice. A window will appear where you need to enter the amount of the received prepayment. The system will automatically fill in the document template. You can create one or multiple Prepayment Invoices for one Estimate To issue a Final Invoice, from the view of the last Prepayment Invoice, choose from the context menu More options > Issue final invoice. The system will automatically calculate the value of the final invoice, subtracting the prepayments received from the total Estimate.

For more information, read dedicated articles:

• How to create a Prepayment Invoice for an Estimate
• How to issue a Final Invoice from an associated Prepayment Invoice tied to an Estimate

Only prepayment and final invoices linked to an Estimate as described in the above articles are correctly reported in InvoiceOcean.
 

Prepayment Invoice: What it is and When to Issue?

A Prepayment invoice is issued when settling received prepayment that are assigned to a specific delivery scheduled for the future. Such prepayments are typically used in expensive investments to secure funds for their realization. If the Estimate is executed correctly and in accordance with the agreements, the prepayment will be settled in the price of the goods or services. This entails the need for accurate documentation of the transaction, especially if the counterparty has not paid a prepayment in the amount of 100% of the value, in which case it is necessary to issue an additional final invoice that closes the entire transaction.

The VAT tax obligation arises upon receiving the full or partial payment (prepayment) in relation to the received amount. When a customer conducts business activities, the paid advance must be documented with a prepayment invoice.

Such an invoice should include:

1. Document name
2. Document number
3. Date of issuance
4. Date of payment receipt
5. Seller's details with VAT identification number
6. Buyer's details with a number used by the taxpayer for tax purposes
7. Order details, as well as the received payment amount

Final Invoice: What it is and When to Issue?

The creation of a final invoice depends on whether our prepayment invoice covered the entire payment for the delivery/service or only a part of it. A final invoice is generated when the prepayment did not cover the full amount of the Estimate. On this document, we should reduce the total value of goods or services by the amount of the received partial payment, thereby reducing the tax amount by the sum of the tax amounts shown on the invoices confirming the payment.

According to the Value Added Tax Act, such a final invoice should include a list of the prepayment invoice numbers that were issued before the service was performed or the goods were delivered. To simplify reconciliation, the seller may also provide the dates of issuance and the amounts of the prepayments, although this is not required.

When more than one prepayment invoice has been issued, and the total generated invoices cover the entire payment, the last prepayment invoice should have the numbers of the previous prepayment documents. Therefore, there is no obligation to issue a final invoice if the prepayment invoice (or several prepayment invoices for one Estimate) covers the entire payment.

Note: If you use InvoiceOcean reports, and your contractor has made a 100% prepayment, documented by one or more prepayment invoices, remember to complete the "income tax accounting date" in the document confirming the receipt of the full payment. Only then will the system recognize income from this order and include it, for example, in determining the prepayment for personal income tax (PIT).

The deadline for issuing a final invoice (similar to prepayment invoices) is no earlier than the 30th day and no later than the 15th day of the month following the month in which the goods were delivered or the service was provided.