Discount - Documents

Parent Previous Next

Discount Allowed - Documents

There are two basic methods to allow a percentage of discount to your debtors, or to enter the discount received from your creditors (suppliers) at the time of the sale or purchase transaction. These discounts are often referred to as trade discounts.

Item discount - This option allows you to specify the percentage of discount in the Discount percentage field on the Document Entry screen.

Invoice discount - This option allows you to specify a percentage of discount, which is applicable to all the transactions in the document.

If you have already specified a percentage in the discount percentage column, this percentage will be calculated as well for the item.

It is recommended that you use only one of these methods (either the item discount or the Invoice discount), unless you wish to allow overall discount on all the transactions including those transactions that already has a discount specified. Both of these methods can be applied to debtors (customers) and creditors (suppliers).


Discount Allowed

This feature is used to calculate and record the trade discounts or other discounts which you may allow to your debtors at the time of the sale transaction. This discount is reflected on the sales source document (Quote, Invoice or Credit Note) and will reduce the selling price on the sales document. When these sales source documents are updated (posted) to the ledger, the net selling price (selling price less discounts) will be recorded as a transaction. This discount will reduce the selling price of the sales, and consequently your gross profit will be affected.


Discount Received

On the other hand, you may use price list received form your creditors (suppliers), which is the normal selling price. Your creditors (suppliers) may give you a trade discount at the time of the purchase. This discount is reflected on Purchase documents, Supplier Returns documents and Orders). When these Purchase documents are updated (posted) to the ledger, the net cost price (the purchase price less discount) at the time of the purchase will be recorded as a transaction. This will reduce the cost prices of your purchases, and will consequently affect the gross profit.

To Allow Item Discount for Debtor (Customer):

To allow a specific percentage of discount to a debtor (customer) on sales documents (Invoices, Credit Notes and Quotes) for a specific stock item (item discount), you need to do the following basic settings:

The Customer Discount percentage (which you will allow for a specific debtor (customer) account) must be specified on the Accounting Information tab of the Edit → Debtor menu.

The Apply Invoice Discount field for the stock item on which you will allow discount, must be selected on the Edit → Stock Items menu.

If both the customer discount percentage (Edit → Debtor - Accounting Information tab) is not entered and the apply Invoice discount field (Edit → Stock Items), is not selected (or if one of the fields is left blank), no discount percentage will automatically be inserted.

In the above example, the Customer Discount percentage for the Debtor account (Accounting Information tab) is set to be 5% and the Apply Invoice Discount field on the Edit → Stock Items menu is selected for the Compressor. For the Drill Press, the Apply Invoice Discount field is blank. No discount is displayed when this stock item is selected. You may then enter or over type any percentage of discount you wish to allow on any of the stock items.


To Allow Invoice Discount for Debtor (Customer):

1.Click on the F8:Discount icon. The Enter overall discount screen is displayed:

2.Enter the percentage for the overall discount you wish to allow to your debtor (customer), and press the Enter key on your keyboard.

The discount will automatically be calculated, and it will reduce the Inclusive amount with the specified percentage.

If there are any item discounts entered, TurboCASH will calculate the overall discount on the selling price, minus the item discount (1500.00 minus 5% = 1425.00) as 1282.50 (1425.00 minus 10% = 1282.50).

If you print the Invoice, the Item discount and the Invoice discount will be displayed in the % Discount column.

If you confirm and convert a Quote to an Invoice, and you have entered any item and / or Invoice discounts, these discounts will reflect on the converted Invoice.

If you have generated repeating invoices, which include any discounts, these discounts will also be copied to the new Invoice.

If you have copied transactions from Invoices, which include any discounts, these discounts will also be copied to the new Invoice.

Discounts should be entered or specified on Credit Notes exactly as they were entered or specified on the original Invoice for which the Credit Note is issued.

There are basically two types of discount:

Trade discount - This discount is allowed to your debtors (customers) for cash sales or to a special classification or group of debtors (customers), e.g. trade customers, retailers, etc. is allowed at the time when you sell items or services to your debtors (customers).

This discount is usually deducted from the selling price at the time of sale. Only the net selling price is reflected, and no discounts are physically recorded as a transaction. This discount will reduce the selling price of the sales and consequently your gross profit will be affected.

Discount allowed for the early settlement of accounts - This discount is allowed to your debtors (customers) at the time of the settlement of their account. You may agree with your customers to allow a certain percentage of discount allowed, e.g. 2½ %, if they settle the full amount on an Invoice within 30 days.

This discount is recorded when a debtor (customer) settles the full Invoice within the specified time. This discount needs to be entered as an expense in a Discount Allowed account, will reduce the net profit, and will have no effect on the gross profit.

Created with the Personal Edition of HelpNDoc: Generate EPub eBooks with ease