Rounding differences

Again and again, questions arise as to how Vertec rounds up when there are deviations on invoices, especially with regard to value added tax or sales tax.

Basically, it can be assumed that Vertec calculates and rounds correctly. See Rounding in vertec for details on how to do this.

Nevertheless, rounding differences can occur, but there are good reasons for them. This article will help you to analyse how these occur.

The rounding steps

Values in Vertec are rounded to the rounding step indicated by the corresponding Currency . Typically, this is CHF 0.05 in Switzerland, EUR 0.01 in Germany and Austria.

Important: A rounding to 1 cent is also a rounding

A rounding to 1 cent (EUR 0.01) is equivalent to a rounding to two decimal places. This is also a rounding. Here is an example to illustrate:

• Something costs net EUR 107.50.
• VAT 19 % of this amounts to EUR 20.4250. Rounded commercially, this amounts to EUR 20.43, with the superior mathematical rounding (round-to-even) EUR 20.42.

This means that rounding of VAT is mandatory here, because no bank account, no financial accounting system and no payment system will be able to process a sum of EUR 20.4250.

This also means: the rounded amount is NO LONGER 19% of the original value: in the case of EUR 20.43 it is 19.0046512%.

Rounding and summing

The main problem with rounds is that on a list of values the method Zuerst runden, dann summieren NOT gives the same result as Zuerst summieren, dann runden.

Here is an example in Excel:

Sum first, then round (horizontal summation)

In the method Summieren, dann runden At the end you get the best possible result if you just look at the sum and then round it up: CHF 3316.05.

However, subtotals that are rounded off are not allowed, for example, because you want to show them with 2 decimal places or transfer the figures to a financial accounting system.

Here is the example with exactly the same numbers:

With a subtotal, there is once again a deviation: CHF 3,316.10.

Round first, then sum (vertical summation)

In the method Runden, dann summieren the individual values or any subtotals look good – for example, if you want to show them with 2 decimal places or if you want to transfer the figures to a financial accounting system.

The total is formed from the rounded individual values or subtotals.

Since Vertec cannot know what subtotal is required, we use the default method Runden, dann summieren one – because the sum of subtotals thus certainly yields the total sum again.

What subtotals does Vertec make on the invoice?

The simple answer is: those that the user requires from Vertec. It is mainly about which individual amounts one wants to see in the financial accounting. The attributes VAT code, revenue account and cost center are relevant here.

For each posting line, Vertec must make a subtotal, and each row must be consistent in terms of the VAT amount, otherwise financial accounting could reject the posting.

For the FAR two things must be fulfilled:

1. Tax cannot be specified with more than 2 decimal places
2. Each transaction line must be consistent.

Rounding up expenses and outlays

In order to avoid rounding differences, the VAT amount calculated separately for each expense item is not added together, as is the case with the pure method runden, dann summieren First, it is determined which subtotals need to be compiled, and then the VAT for these subtotals is rounded up and added up.

Of course, the subtotals also round the net amounts. If there is a difference to the method summieren, dann runden, then the difference is added to the net amount of the largest sub-total. The sum of the net amounts always adds up.

It is not possible to simply add a possible difference in the VAT amount to the largest item, as in the case of the net figure, because then the net * VAT rate would not correspond to the gross amount.

For example, let’s take an invoice where Vertec has been configured to require a posting = subtotal for each expense item. The different revenue accounts require the following breakdown:

If we look at the VAT amount of the individual expense entries, we see that it is, of course, exactly these amounts, because the rounding is the same:

If, on the other hand, Vertec is exempted from the obligation to create subtotals, the invoice looks like this:

The value is the expected value if you simply look at the sum of the net amounts. If you look at the rounded VAT amounts of the individual expense entries, the sum of these still amounts to CHF 565.83.

Rounding on services

For services, there is quite a lot of code in terms of discounts, flat-rate phases (with or without services), flat-rate prices, etc.

Here, too, differences arising from rounding are allocated to the largest item, after the discounts have also been allocated pro rata to the invoice totals.

Big difference here to the expenses / outlays: wertext can be 4-digit, but also for services, VAT is then calculated only on the sums (i.e. the VAT amounts of the individual services are not summed up, which would certainly lead to large differences for 2-digit values).

Invoice totals

Technically, this is handled via so-called Invoice Totals , which are recalculated on an ongoing basis in the case of a provisional invoice, but are persistent in the case of a settled invoice.

If you want to view all invoice totals that have been created from the invoice, this can be done via the following associations:

• Services: totaleleistungen
• Expenses: totalespesen
• Outlays: totaleauslagen

Gross vs. Net

Vertec is basically a net tool, and VAT comes on top. If amounts are entered as gross amounts, Vertec calculates down and up again.

This may result in the net amount plus VAT not being equal to the gross amount entered simply because it does not match (cannot match). Example:

An expense document over EUR 400.00:

This will be charged on an invoice:

How is it possible that the total including VAT is only EUR 399.99?

Here it really goes down and up again: the gross recording results in a net amount, on which VAT is calculated. The net amount is (of course) rounded to two digits.

For these figures, it is as follows:

EUR 399.9947 is rounded to EUR 399.99.

Rounding of VAT by amount

How is VAT calculated on the individual services, expenses and outlays?

As we have seen, these values are NOT summed up for the amounts on the invoice, but of course it is interesting to know how this is calculated.

Rounding of VAT on individual services

It depends on whether the Hourly rates do not round system setting is not rounded. If so, the calculation of the wertext not rounded (which always means 4 decimal places). If not, rounded according to Currency and Commercial rounding setting.

Example:

• CHF 79.7625 with system settings turned on Do not round hourly rates
• CHF 79.75 when system settings are turned off Do not round hourly rates

On the other hand, the VAT for services is never rounded – on the surface you always see only 2 decimal places, but this is only the display:

Rounding of VAT on individual expenses and outlays

The amount of VAT (mwstbetrag) based on the derived attributes WertExtUnrounded calculated. This is a calculated attribute where a lot of effort is spent trying to get an unrounded net amount of the entry. This is of course especially important for gross entries.

The VAT amount is then rounded, depending on the system setting Vat on expenses and outlays round – and here the following must be observed:

If VAT rounding on expenses and expenses is turned on, then the usual method of rounding currencies is used (incl. Commercial rounding ), if turned off, then simply Round called – but that’s a Round-to-Even.

This means that the commercial rounding setting is ignored if:

• VAT on expenses and outlays rounded off
• the Member mwstbetrag queried on individual expenses and outlays

This means: Disabling the system setting rounding VAT on expenses and outlays – which is obsolete in Germany and Austria with the usual rounding to EUR 0.01 anyway – causes that the commercial rounding rules are not observed. This is no longer relevant because the Member mwstbetrag is not used for invoicing customers. But it means that in Germany and Austria with the usual rounding step of 0.01, the feature VAT on expenses and outlays does not round anything, but turns off the commercial rounding rules.

Accounts payable and purchase values for outlays and expenses

In the case of the creditor, the values of MWSTBetragEKFW of each attached outlay or expense. In the implementation, there is now an exciting case distinction:

Is on this outlay or expense both xWertIntFW as well as xWertIntFWBrutto VAT is simply the difference. In this way, it is possible to include any amount of VAT in the purchase values, which can be useful if the supplier comes up with a different amount of VAT than Vertec itself.

If these values are not explicitly set, then the member is WertIntFWEingabe used as the basis for the purchase value. This is a calculated value and implemented in a very complicated way to take into account the various options such as exposure positions, gross vs. net, price vs. margin.

When calculating VAT on the basis of WertIntFWEingabe the system setting rounding Vat on expenses and outlays round is taken into account again – again without commercial rounding if the system setting is turned off (see section Rounding of vat on individual expenses and outlays above).

The creditor creates an individual (debt) posting for each individual outlay or expense on the creditor. Thus, if 10 expenses or outlays are assigned to the creditor, there are 10 such postings and the credit posting to the collective account. Because the VAT can be defined on each individual entry, there are fewer unexpected results than with invoices.