Glossary

Content

1. Electronic invoice for payment

2. Billing (Advanced e-Invoicing)

3. Accounts receivable (A/R)

4. Accounts payable (A/P)

5. Days Sales Outstanding (DSO)

6. Accounts Receivable Management (ARM)

7. Accounts Receivable Automation

8. Accounts Payable Automation

9. Sales order (SO) (Client order)

10. The act of reconciliation of mutual settlements with counterparties

11. Reliability-centered maintenance (RCM)

12. Chart of Accounts

13. Advance payment

14. Bridge credit (Intermediary credit)

15. Trade credit

16. Credit Note (Credit Memo)

17. Debit Note (Debit Memo)

Electronic invoice for payment (e-Invoice) is a digital invoice for payment that is transferred from one information system to another, for example, from the accounting program of an enterprise to the accounting program of a counterparty or a government institution.

Advantages: save time, reduce costs in the private or public sector, reduce errors when entering data into an accounting program.

The goal is to minimize the amount of work and time required to create and send an invoice for payment to the payer (buyer). The e-Cont.md service does most of the work for people. In addition, there is no need to print out an invoice, send it by E-mail (or in some other way) or enter it into an accounting program.

• The outgoing invoice is generated by the supplier of the goods or services.
• The incoming invoice is received by the buyer of goods or services.

Billing (Advanced e-Invoicing) is the process of generating invoices for customers on a regular or ad hoc basis, depending on the type of plan the customer has chosen.

Vendor/Seller invoicing is a step-by-step process of requesting payment from customers through invoice issuing.

The electronic invoicing system should potentially allow the implementation of a complex billing procedure. Automation of the invoicing system for payment will improve the efficiency of business processes in the company by reducing the time spent on managing invoicing and eliminating possible errors.

What automated billing systems should usually provide see HERE.

Accounts receivable (A/R) (Trade Receivables) is a debt to an enterprise, organization or institution from legal entities or individuals who are their debtors, i.e. debts receivable.
Accounts receivable arise when the goods (works, services) are sold, but the funds for them have not yet been received, or when the advance payment has been paid to the supplier, but the goods (works, services) have not yet been received on his account,

NAS 2013 Moldova [En] - National Accounting Standards [En] “Receivables and Financial Investments” [En, 2013]

SNC 2020 Moldova [Ro] - National Accounting Standards [En] „Creanţe şi Investiţii financiare” (SNC_7_118) [Ro]

Definitions
4. This standard uses the following terms with the meanings specified:
Receivables – rights of the entity arising from past transactions or events and as a result of which extinction, the inputs (increase) of resources embodying economic benefits are expected.

Trade receivables and advances provided:
17) Trade receivables shall comprise the receivables on goods sold, services provided and work performed.
18) Trade receivables shall be accounted for every delivery of goods, provision of services and execution of work as a concomitant increase in receivables and revenues through current liabilities.

Accounts payable (A/P) (Trade/Commercial liabilities) is a debt of an entity (enterprise, organization, individual) to other persons, which this entity is obliged to repay, i.e. debts payable.
Accounts payable arises when an advance payment is received from buyers, but the goods (works, services) have not yet been sold, or if goods (works, services) have been received from the supplier, but the funds for them have not yet been paid.

NAS 2013 Moldova [En] - National Accounting Standards [En] “Equity and Liabilities” [En, 2013]

SNC 2020 Moldova [Ro] - National Accounting Standards [En] „Capital propriu și datorii” (SNC_9_118) [Ro]

Definitions
4. This standard uses the following terms with the meanings specified:
Liabilities – actual liabilities of the entity arising from the past economic facts and through their settlement that is expected to result in an output (decrease) of resources that incorporate the economic benefits.

Trade liabilities:
45. Trade liabilities include liabilities to:
1) suppliers of goods and services purchased;
2) buyers on advances received for the subsequent delivery of goods and services, etc.

Days Sales Outstanding (DSO) (also Days Receivable, Average Collection Period, Average Debtor Days) is an indicator used by a company to assess the volume of outstanding receivables.
This is the average number of days it takes for a company to receive payment for a sale.
It is equal to the ratio of the number of days in the reporting period to the turnover of receivables. The indicator converts the receivables turnover into its equivalent, expressed in days.

As a rule, the maturity of receivables is calculated monthly.

• A high value of accounts receivable turnover in days indicates a customer base with problem loans and/or a company experiencing difficulties in collecting payments
• A low value of the coefficient indicates that the firm has a tight credit policy, which may also hinder the increase in sales.

Accounts Receivable Management (ARM) is the process of extending credit to customers, issuing accurate invoices, and collecting timely payments from customers. Reflects the set of policies and procedures that a company follows to manage credit sales. Accounts receivable management begins with an assessment of the counterparty's creditworthiness and ends with the collection of receivables.

A sound receivables management system should have a "single credit standard", "loan term" (appropriate to the industry) and a "collection program".

Accounts Receivable Automation is the Automation of the process of collecting and managing Commercial Accounts Receivable. This is a complex procedure that, in general, consists of the following aspects:

• Issuing an electronic invoice for payment or Billing (Advanced e-Invoicing)
• Collection of invoices for payment
• Acceptance of payments
  Payment methods available in Moldova.
• Payment processing
• Drawing up reconciliation acts
• Tracking and forecasting

Accounts Payable Automation is the Automation of the process of receiving electronic invoices for payment, approving invoices for payment, processing information about payments, reconciling invoices with payments and having access to reports.

All invoices for payment are stored in the cloud, in one place.

Automation of Accounts Payable (Trade/Commercial liabilities) accounting includes four components:

1. Receiving an electronic invoice for payment
2. Approval of invoices for payment
   Once data is collected, managers either match invoices against purchase orders and product receipts or automatically forward them to the appropriate group or individual for review and approval. Once approved, they are marked "approved" in the accounting system.
3. Payment to the supplier
   Payment can be made by any of the available methods.
   Payment methods available in Moldova.
4. Archiving and auditing
   An electronic archive, for example, in the cloud makes it easy to find invoices for payment, analyze and audit anytime and anywhere.

Sales order (SO) (Client's order, Customer's order) a document that confirms the customer's order and starts the order fulfillment process. When an order is placed, the company must check whether it has enough inventory to complete the order or whether it has the adequate workforce and supplies to complete the service. If the customer has placed an order, the seller's responsible person must place a sales order and send one copy to the buyer as an order confirmation and retain the other copy as an internal document to initiate the order fulfillment process.
Unlike an invoice for payment, a sales order is not a request for payment from your customer. This is simply a confirmation that the order has been accepted and is being processed. After processing and sending the order or providing the service, the client will be invoiced for payment. Using sales orders to manage accounts receivable becomes more important as your small business grows and communication between departments becomes more complex.

The act of reconciliation of mutual settlements with counterparties – this is a document that is compiled by the accounting department of an organization to reconcile mutual settlements between the parties (organizations, individual entrepreneurs, etc.) for a certain period of time (month, quarter, year).

The act of reconciliation of mutual settlements is an accounting document that reflects:

• the movement of products (works, services) and cash between two counterparties for a certain period;
• the presence or absence of debt of one party to the other on a certain date.

The act is NOT a primary document, because it DOES NOT confirm the fact of payment of funds to another person, and its use does not change the financial situation of the parties in any way.

In fact, this is a technical document, the use of which in most cases is a voluntary initiative of the accountant.

It is recommended to use it in the following situations:

• in case of partial payment for goods/services in the process of implementing procurement contracts;
• long-term cooperation with the presence of regular supplies of goods or services;
• conclusion of several agreements with one partner or drawing up additional agreements to existing agreements;
• provision by the supplier of a deferred payment;
• transfer by the buyer of a large amount of prepayment (advance payment) in the conditions of regular deliveries;
• high cost of goods or services.

The data indicated in the act of mutual settlements by the seller organization must match the information of the counterparty.
If discrepancies are found in the credentials, they are fixed in the final part of the document.
The signing of the act of reconciliation of mutual settlements indicates the recognition of the debt by the counterparty.

Reliability-centered maintenance (RCM) is a concept of maintenance planning to ensure that systems continue to do what their user require in their present operating context. Successful implementation of RCM will lead to increase in cost effectiveness, reliability, machine uptime, and a greater understanding of the level of risk that the organization is managing.

Chart of Accounts is a financial organizational tool that provides a complete listing of every account in the general ledger of a company, broken down into subcategories.

Developed for each country separately.

Ministry of Finance of the Republic of Moldova, Order Nr. 119 dated 06.08.2013, on approval of the General Chart of Accounts

The General Chart of Accounts of Moldova is developed on the basis of the National Accounting Standards (NAS) and other accounting regulations, taking into account the disclosure requirements in financial statements and the information needs of the subject.
The General Chart of Accounts applies to entities that maintain accounting records on a double entry basis, with the exception of entities that apply International Financial Reporting Standards (IFRS) and public institutions.
The General Chart of Accounts regulates the procedure for reflecting economic facts on the accounts, which follows from the provisions of the National Accounting Standards and other accounting regulations. The reflection of economic facts on the accounts is carried out depending on their economic content, in compliance with the principles, norms and accounting policies of the entity.

Advance payment or Prepayment is any advance payment made by the buyer-customer before the shipment of goods or the provision of services.

An advance payment is obligatory for deliveries on credit terms, it can range from 10 to 40% of the contract value and is included in the final settlements; 100% advance payment may also apply. In case of non-fulfillment of obligations, the advance payment is subject to return.

An advance should not be confused with a Earnest Money deposit. The difference lies in the fact that if the contract is not fulfilled, the party responsible for the violation loses the Earnest Money deposit (if the recipient of the deposit is responsible, he returns it in double size). This rule does not apply to advance payments. In addition, unlike a Earnest Money deposit, an advance is transferred only as a performance of an obligation, but not as a form of contract security.

Bridge credit or intermediary credit is an interim financing option used by companies to solidify their short-term position until a long-term financing option can be arranged.
Bridge loan used until a company secures permanent financing or pays an existing obligation.

Trade credit is a business-to-business (B2B) agreement in which a customer can purchase goods without paying cash up front, and paying the supplier at a later scheduled date. Usually, businesses that operate with trade credits will give buyers 30, 60, or 90 days to pay, with the transaction recorded through an invoice.
Trade credit can be thought of as a type of 0% financing, increasing a company’s assets while deferring payment for a specified value of goods or services to some time in the future and requiring no interest to be paid in relation to the repayment period.

Main conclusions:

• Trade credit is a type of commercial financing in which a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date.
• Trade credit can be a good way for businesses to free up cash flow and finance short-term growth.
• Trade credit can create complexity for financial accounting depending on the accounting method used.

Credit Note (or Credit Memo) is a written message sent by a seller to a buyer in which the seller notifies the buyer that the amount owed by the buyer to the seller is reduced by the amount specified in the credit note.
A credit note is used in situations where the seller reduces the cost of the sold goods (works, services).
So, a credit note can be used in case of 1) the seller provides a discount for the volume of purchased goods 2) errors in previously issued invoices 3) the buyer reveals defects in the goods if the parties have agreed to reduce the cost, etc.

The term "Credit Note" is not mentioned in the normative acts of the Republic of Moldova, but this document is used, first of all, in international practice and international contracts. Usually, the possibility and conditions for issuing a Credit Note are expressly specified in the agreement.
Accounting and taxation of operations with a credit note depends on the essence of the operation. So, if a discount is reflected in the credit note, then the discount should be reflected in the accounting. If the credit note reflects a decrease in the value of the goods, then the cost adjustment operations are also reflected in the accounting (in this case, for example, an adjustment invoice is issued for payment).

Debit Note (or Debit Memo) is a written message sent by a seller to a buyer in which the seller notifies the buyer that the amount owed by the buyer to the seller is increased by the amount specified in the debit note.
Some businesses follow the practice of issuing debit notes to customers when they sell them goods or provide services before they are paid, in order to fix the amount owed to them and the timing of their payment.

The term "Debit note" is not mentioned in the normative acts of the Republic of Moldova, but this document can be used, first of all, in international practice and international contracts. Usually, the possibility and conditions for issuing a Debit note are directly indicated in the contract.