A settlement discount is a percentage discount that you are offered by your suppliers to encourage you to pay your invoices early. It is also known as prompt payment discount or cash discount.
This is a percentage discount if an invoice is paid within the specified number of days, for example a 3% discount if paid within 15 days of the invoice being issued.
In Financials, we offer you 2 settlement discount fields so you can add on 2 discount terms for your suppliers if you wish to.
You can use the 1st settlement discount fields for just setting up 1 discount term, but you will not be able to enter discount for the 2nd settlement discount where the 1st settlement discount is left empty.
The settlement discount fields are found on the Terms tab of your supplier record and you can follow our Populate the Terms tab for a supplier article for more details.
You can also add ad-hoc settlement discount for a purchase ledger invoice and or credit note if you don't wish to add the settlement discount against your customer records.
Settlement Discount is not automatically calculated when you are not using Remittance BACS/Cheques or Contra Adjustments. When creating a purchase ledger payment manually, you will have to manually issue a credit note for the discount you are offered by your supplier.
Access the Terms tab on a suppliers record
Click Creditors then click Suppliers.
Note: All suppliers are displayed. You can narrow down your search by using the advanced filters. You can also search on the columns directly by pointing the mouse to the name of the column and click on the icon and choose from the available filter list, then click OK.
Click on the Edit button at the bottom of the screen to set the record into edit mode, then click the Terms tab and find the Discount section where you can see the settlement discount fields and enter the agreed terms with your supplier.
Once you are done, click on Save.
Note: If you can see the Close button instead of the Edit button, it means that you don't have access to edit supplier records.
Settlement Discount fields explained
Field | Description | Possible error messages |
1st Settlement Discount % |
| "Settlement Discount 1 needs to be greater than Settlement Discount 2." |
If paid within (days) |
| "If paid within (days) for Settlement Discount 1 must be greater than 0 if Settlement Discount 1 is greater than 0." "If paid within (days) for Settlement Discount 2 must be greater than if paid within (days) for Settlement Discount 1." |
2nd Settlement Discount % |
|
"Settlement Discount 2 needs to be less than Settlement Discount 1" |
If paid within (days) |
|
"If paid within (days) for Settlement Discount 2 must be greater than 0 is Settlement Discount 2 is greater than 0." |