Accounting settings contains the following parts that must be completed top to bottom in the provided order.

Dimension groups and dimensions

Dimensions are used as additional classifiers for distributing income and expenses. The operation of the company can be analysed more precisely by using dimensions in financial as well as management accounting, and expenses can be managed better. If the main distribution of income and expenses into types takes place on the level of ledger accounts, then taking into use dimensions enables to also distribute income and expenses by cost factor, department, employee, cost operator, project etc. 

To set up dimensions you must first set up dimension groups and then you can record the dimension values in the dimension group. For example if the company sells its products on various markets, then one dimension group may be the geographic distribution and in such a case the dimension values in this group are countries: Estonia, Latvia, Lithuania, Finland.

Adding dimension groups

Code: the code used in the accounting software is entered here, which may consist of letters as well as numbers.

Name: the dimension group code name or explanation is entered here.

Used on sales invoices: a tick is added if this dimension group is used for preparing sales invoices.

Used on expense reports: a tick is added if this dimension group is used for preparing travel and business expense reports.

NB! Good to know: dimensions can be imported after the used dimension groups have been determined under dimension settings.

Adding dimensions

Group: you can choose a pre-set dimension group from the drop-down menu.

Code: the dimension code used in the accounting software is entered here, which may consist of letters as well as numbers.

Name: dimension code or explanation is entered here.

Related dimensions: dimension combinations always used by default may be set up here.

Accounts

The ledger chart of accounts used in the company’s accounting is entered in this part. The chart of accounts can be entered by hand as well as uploaded by Excel table. Only those accounts to which payments are made are entered into the chart of accounts. Aggregate and generalising accounts are not entered here.

Importing a chart of accounts from Excel

Page: which page or sheet from an Excel table is entered here.

First row: if the chart of accounts table in Excel has heading rows, it must be noted which row the chart of accounts information starts from.

Load a sample file: there is also a chance to use Envoice’s own pre-set chart of accounts and delete or add accounts there or change/specify the names of accounts as necessary. A chart of accounts already existing in Envoice can be exported into Excel from there, you can then make the desired changes and then import back as improved.

Entering accounts one by one and amending previously entered information view:

Number: the account number used in accounting is entered here.

Name: account name is entered here.

Additional information: free additional field for text, which can be used for adding additional external explanations for the company’s employees if necessary.

Mandatory dimensions: marked with a tick if using some dimension group is mandatory for this account (so-called control function).

Value added tax rates

The aim of this setting is to enable to make VAT calculations in Envoice. The setting also enables to link VAT rates, VAT codes and accounts used in the accounting software with each other to use Envoice’s automated options in the sale as well as purchase invoice solutions and to enable to automatically generate VAT returns from the accounting software later.

NB! Important link: in order for VAT accounting to work on a purchase invoice in Envoice, the supplier VAT identification number field must be completed on the supplier’s card. Otherwise the purchase invoice does not enable VAT accounting.

The following VAT rates and codes have been set up by default (these can be changed and supplemented and new ones can be added if desired):

Adding/changing the VAT rate:

VAT rate: the VAT percentage used in calculations is entered here.

Code: the code corresponding to the VAT rate in the accounting software is entered here.

Name: a short explanation for the VAT rate that is wanted to be displayed in this system is entered here, e.g. “20% VAT”.

Type: the regular (if declared in the local value added tax return) or possible claimed VAT (if some other state is approached to get back the VAT) selected from a drop-down menu.

Reference to the Value Added Tax Act: place for the reference, which must be noted on the invoice in case of turnover taxed by a zero-per cent VAT rate or tax-free turnover (e.g. VAT Act § 37, 40).

Taxation principle: the drop-down menu enables to choose whether taxable (at various rates 20%, 9%, 0%), not turnover (for example interest, default interest) or tax-free turnover (for example rent, insurance).

VAT account for purchase: ERP account entered into the chart of accounts, where purchase VAT amounts are entered.

VAT account for sale: ERP account entered into the chart of accounts, where sale VAT amounts are entered.

Free choice for VAT rate: add a tick if the company asks less than 100% of input VAT on some purchase invoice, for example if pro rata VAT accounting is used.

Default rate for this VAT rate: add a tick if this is the main VAT code used in Envoice in respect of this rate (several codes may be used for one rate).

VAT rules for sales invoices

This setting is made if the company uses the Envoice sales invoices solution. The basis for grouping products and services here is the VAT percentage and the sales revenue account. For example if the company sells products only in Estonia with one VAT rate and their sales revenue is recorded in accounting only on one account as well, one group must be set up. If however all goods are sold in Estonia but for example the food products sales revenue and consumer goods sales revenue are distinguished on the level of ledger accounts, two groups must be set up.

NB! Important link: the setting is used in the products and services setting under the sales invoices part. It is not possible to prepare sales invoices without creating settings for the product or service group.

The same information can also be added directly from the sales invoice in the invoice rows block on the blue button “Add new VAT rule”:

What am I selling?: you can choose product or service.

Where am I selling?: there are three options to choose from: local, European Union or outside of the European Union.

VAT: you can choose between pre-set VAT rates from the drop-down menu.

Sales revenue account: accounting software account entered into the chart of accounts, where the sales revenue of this group is recorded.

Rule name: short description that is displayed in the sales invoice settings when setting up goods/services in respect of VAT.

Localisation

In the localisation part of the table it is possible to add translations of references arising from the VAT Act for displaying on invoices submitted in other languages.

Means of payment

Means of payment are used for making automatic transfers of transactions made with clients, suppliers and reporting persons. The main means of payments are payments in cash i.e. payments from the cash account or payments by transfer i.e. payments from the bank. In case of cash payments the correspondence account for sales as well as purchase transactions is the ledger cash account. If a person can use a company’s bank card, when paying by card the correspondence account for sales as well as purchase transactions is the respective settlement account’s ledger account. 

With a payment term i.e. on the sale on credit terms the sales transaction correspondence account is a claim against the buyers and in case of a purchase transaction payable to supplier. The correspondence accounts for transactions made with related persons (for example companies in the group) will be determined additionally on the contact cards of these persons. In case of digitised invoices and purchase invoices entered by themselves the default means of payment is “transfer”, which can be changed on a specific purchase account if necessary.

NB! Good to know: a means of payment used by default can be determined for each contact (buyer or supplier) and reporting person.

Adding/changing means of payment

Name: a short description is entered here, i.e. cash, transfer, card payment; this description will also be displayed in the sales invoice view.

Type: the drop-down menu allows to choose from cash, transfer, reporting person or defined by user; “defined by user” can be used as a type if it is some other type than cash, transfer or reporting person.

Correspondence account on sales invoice: the ledger account must be selected according to the transaction and whether it is a buyer or reporting person.

Correspondence account on purchase invoice: the ledger account must be selected according to the transaction and whether it is a supplier or reporting person.

Default type means of payment: a tick is added if the company uses several means of payment of the same type.

Travel, business expenses

The types of expenses are established in the first division that can be set up. The types of expenses are determined only in order for it to be easier for reporting persons to prepare and submit travel and expense reports. The following types must be set up: daily allowance, private car compensation, representation expenses and the so-called general expenses, which includes for example accommodation and transport costs. Setting up types of expenses simplifies choosing the correct type of expense for the reporting person without knowing the accounts using in accounting.

Setting up interim accounts is necessary here in order for the functionality of preparing reports and thereafter for the accountant to add the necessary accounting information to operate. When using interim and advance payment accounts receipts will be recorded one by one to these accounts and the final expense entries will only be made pursuant to the report. If interim and advance payment accounts are not used, expense reports are made directly from each receipt.

NB! Important link: if the company has not activated the expenses module in Envoice, then setting up travel and business expenses is not visible.

Travels advance payment account: here you can choose the account in the chart of accounts from a drop-down menu, where for example the daily allowance advance payment shall be transferred.

Default VAT of this account: as the VAT amounts become evident on the revenue and expense entries, we recommend to choose the exempt from VAT code here.

Business expenses interim account: here you can choose the account in the chart of accounts from a drop-down menu where initial recordings from the report shall be made, which will be specified by a detailed recording of each expense document added to the report and thereby are transferred out of this account.

Default VAT of this account: as the VAT amounts become evident on the revenue and expense entries, we recommend to choose the exempt from VAT code here.

Unjustified expense distribution permitted: in case of a tick, reporting persons are permitted to submit expense documents of which only a part is the company’s expense and a part is personal expense.

Reporting person supplier: a tick will be added here if reporting persons are in the suppliers register in ERP.

NB! Important link: if types of expenses have not been set up in advance, it is not possible to prepare a travel application, report and business expense report.

Adding/amending types of expenses

Name: an explanation must be written here that is simple to understand for the reporting person, i.e. accommodation cost, daily allowance, transport etc. You must create as many types of expenses, as many different types are wished to be distinguished on the reports.

Type: the selection includes general, representation expenses, compensation for using a private car and daily allowance. The type “general” should be used for characterising all types that are not representation expenses, car compensation or daily allowance.

Region: the drop-down menu allows to choose whether it is a local or non-local expense.

Expense account: the drop-down menu allows to choose the ledger account where transfers related to this expense are made.

Thereafter the dimension groups used by the company are displayed, which can be linked with the type of expense mandatorily.

Number series

Number series must be set up before taking into use some functionalities. For example it is not possible to start preparing sales invoices or travel or expense reports of reporting persons before the number series are fixed.

Possible number series types that can be selected from the drop-down menu are purchase invoice document number, sales invoice number, travel application or report number, expense application or report number and document number.

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