Settlement discount or prompt payment terms can be set up on customer terms or you can add them when you're creating a sales invoice.
Adding settlement discount directly on an invoice
Click Debtors then click Transactions.
Click Invoice and enter your customer . You can enter the customer account code. If you're unsure of the code, you can click the drop-down arrow and select Show More which displays several more records and offers you to search the code and name of the customer.
Click the Terms tab and enter the required Settlement Discount.
Note: The settlement discount is only going to be valid for this transaction and won't update the customers terms.
Using the settlement discount entered on the customer record
The settlement discount can be added to your customer record on the Terms tab of the customer record.
Click Debtors then click Transactions.
Click Invoice and enter your customer . You can enter the customer account code. If you're unsure of the code, you can click the drop-down arrow and select Show More which displays several more records and offers you to search the code and name of the customer.
Click the Terms tab and you can see that the settlement discounts added on the customer record are pulled through and you can change these.
Note: If you change the original settlement discount pulled through from the customer, this is only going to be valid for this transaction and won't update the customers terms.
You can locate the transactions you wish to process on the Bulk Receipts screen and enter the details to apply to the receipts you're entering.
Calculation of VAT on all invoices should be made based on full price.
The system checks the method that you use to calculate the settlement discount at the time the invoice was raised to ensure that settlement discounts do not apply twice to the VAT value.
You can't apply a settlement discount to a partial allocation with multiple VAT codes. You have to manually enter any adjustments.
Scenario | Description |
Bulk receipts and settlement discount |
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Example of a simple invoice with one detail line:
Click Debtors then click Transactions.
Click Invoice and locate your customer. You can enter the customer account code. If you're unsure of the code, you can click the drop-down arrow and select Show More which displays several more records and offers you to search the code and name of the customer.
Click the Terms tab then in the 1st Settlement Discount % field, enter 12% and in the If paid within (days) field, enter 10.
In the GBP Net column on the details section, enter £100.00.
Note: The Gross value = £100 + £20 VAT = £120.
Click on Save to gain access to the Save Options screen, make sure you do not batch the invoice, click Save.
Click Bulk Receipts then select the above transaction.
Note: The Allocated Value and Outstanding = £120.00, the Settlement Discount = £14.40 and the Settlement % = 12%.
Click Process then click Save.
Click Yes on the confirmation of posting a total value = £105.60.
Note: Credit note value Net = £12.00, VAT = 2.40, Gross = £14.40.
Example of sales order with terms of 12% settlement discount and processed invoice
Line | Quantity | Price | Net | VAT Code | VAT Rate | VAT | Gross |
1 | 15 | 18.99 | 284.85 | 1 | 20.00% | 56.97 | 341.82 |
2 | 12 | 17.95 | 215.40 | 2 | 5.00% | 10.77 | 226.17 |
3 | 9 | 25.95 | 233.55 | 1 | 20.00% | 46.71 | 280.26 |
Total |
|
| 733.80 |
|
| 114.45 | 848.28 |
Double entry
Account | Debit | Credit |
Debtors Control | 845.25 |
|
Sales |
| 733.80 |
VAT Control |
| 114.45 |
Generate a receipt via bulk receipts within the settlement days
Payment value = 746.46
Discount value = 101.79
Credit note automatically creates as follows
Line | Net | VAT Code | VAT Rate | VAT | Gross |
1 | 62.51 | 1 | 20.00% | 12.44 | 74.65 |
2 | 25.85 | 2 | 5.00% | 1.29 | 27.14 |
Total | 88.06 |
|
|
|
|
Double entry
Account | Debit | Credit |
Bank | 746.46 |
|
Debtors Control |
| 746.46 |
Sales Discount | 88.06 |
|
Debtors Control |
| 101.79 |
VAT Control | 13.73 |
|