When a business is provided service from someone who does not issue invoices (e.g. an artist’s lecture), they must issue a document called Substitute Vendor Invoice. this document replaces the invoice that the service provider was supposed to issue.
Transaction Types
Before issuing a substitute vendor invoice, a new Sort Code must be selected and applied to all vendor Account Cards for which substitute vendor invoices are issued. This Sort Code will be used by WizCount to detect the substitute vendor invoices when issuing a VAT report.
In addition, the following three Transaction Types should be defined:
(1) Income from Substitute Vendor Invoice
| Debit Account | % | Credit Account | % |
| Income from Substitute Vendor Invoice | 100 | ?
(Customer/ Vendor ID) |
100 |
When opening the card for Income From Substitute Vendor Invoice, make sure the card’s Main Account is: Income from Substitute Vendor Invoice. (This data is required for the software not to include the transactions of this card in VAT on output calculation).
In addition, a new Sort Code must be selected and applied to all vendor Account Cards for which substitute vendor invoices are issued. This Sort Code will be used by WizCount to detect the substitute vendor invoices when issuing a VAT report.
(2) VAT Applicable Royalties Expenses:
| Debit Account | % | Credit Account | % |
| Royalties and Honorarium Expenses | 100 | ?
(Customer/ Vendor Key) |
117 |
| Vat On Input | 17 |
The Main Account of Royalties Expenses Cards (both VAT applicable and VAT exempt) is Expenses.
(3) VAT Exempt Royalties Expenses:
| Debit Account | % | Credit Account | % |
| Royalties Expenses | 100 | ?
(Customer/ Vendor Key) |
100 |
These three Transaction Types are recorded in the Additional Transaction Types for Substitute Vendor Invoice fields in the General Data> Inventory Documents Settings> Document Numbering screen.
Issue Process
The Account ID for which the Substitute Vendor Invoice is issued should belong to the Vendor Group (i.e. its Main Account should be: Vendors).
In the Customer/Vendor Name field, WizCount does not display the service provider’s Account Card Name, but the Company Name in which the document is issued (the Company Name can be recorded on the settings screens).
The VAT Registration Number of service providers for which Substitute Vendor Invoices are issued must be the VAT Registration Number of the company issuing the document.
The name of the service provider (Account Card Name) will appear in the Address field.
Base Documents
Substitute Vendor Invoices can be issued based on Purchase Orders: Go to the Base Documents tab and select the required Purchase Order Number in the Filtering window.
Journal Entries
A Substitute Vendor Invoice (e.g. for 100 NIS + 17% VAT) creates the following journal entries:
| Debit Account | % | Credit Account | % |
| Vendor (Service provider) | 117 | Income | 100 |
| Vat on Output | 17 |
| Income from Substitute Vendor Invoice | 100 | Vendor (Service provider) | 100 |
| Royalties Expenses | 100 | Vendor (Service provider) | 117 |
| Vat On Input | 17 |
Note: If the activity is exempt from VAT (e.g. artist lecture in Eilat), the above journal entries do not include VAT (based on Transaction Type: VAT Exempt Royalties Expenses).
After paying the check to the service provider the balance on his Account Card is reset. (The service provider’s check is without VAT and should include Withholding Tax).
