Settlement discount or prompt payment terms can be set up on the supplier terms or you can add them when you're creating a purchase invoice.
Adding settlement discount directly on an invoice
Click Creditors then click Transactions.
Click Invoice and enter your supplier. You can enter the supplier 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 supplier.
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 supplier terms.
Using the settlement discount entered on the supplier record
The settlement discount can be added to your supplier record on the Terms tab of the supplier record.
Click Debtors then click Transactions.
Click Invoice and enter your supplier. You can enter the supplier 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 supplier.
Click the Terms tab and you can see that the settlement discounts added on the supplier record are pulled through and you can change these.
Note: If you change the original settlement discount pulled through from the supplier, this is only going to be valid for this transaction and won't update the supplier's terms.
You can locate the transactions you wish to process on the Remittance BACS and Cheques screen and enter the details to apply to the payments 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 |
Remittances and settlement discount |
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Example of a simple invoice with one detail line:
Click Creditors then click Transactions.
Click Invoice and enter your supplier. You can enter the supplier 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 supplier.
Click the Terms tab then in the 1st Settlement Discount % field, enter 12% and in the If paid within (days) field, enter 5.
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 Remittance BACS then select the above transaction to process the remittance.
Now click BACS Export either select the checkbox then click Process or click Process.
Note: The Value is £105.60 which is £120 - £14.40 = £105.60.
Click Continue on the Process selected lines screen, then continue on the Export screen.
Note: A credit note is posted against the supplier with values Net = £-12.00, VAT = -2.40, Gross = £-14.40.
The calculation is the same for when you process Remittance Cheques.