Procountor's cash discount processing enables setting up customer and supplier-specific cash discounts and creating orders and invoices using the discounts. Cash discount processing also automatically keeps the sales and purchase ledgers and cash discount entries up to date.
Enabling cash discount processing
Cash discount processing is activated in Management > Company information > Usage settings. The function is activated separately for sales and purchase invoices.
- The Cash discount for sales setting affects the use of two-part payment terms on sales invoices and sales orders, and in the customer register. Activating this function enables using a payment term with a cash discount due date and percentage in addition to the net due date for sales invoices and sales orders and in the customer register.
- The Cash discount for purchases setting affects the use of two-part payment terms on purchase invoices and orders and in the supplier register. Activating this function enables using a payment term with a cash discount due date and percentage in addition to the net due date for purchase invoices and purchase orders and in the supplier register.
Settings in business partner register
When cash discount processing is activated in Usage settings, customer and supplier specific terms of payment and cash discounts can be set up in Business partner register. These terms and discounts will be used on orders and invoices created for business partners in the register.
Business partners’ basic info can be edited in Registers > Business partners by first searching business partners and then moving on to the selected business partner’s Basic info view.
When cash discount processing is activated, the following fields are shown on Basic info view:
- Term of payment (d / %): enter the term of payment (default value is the term of payment set in Usage settings) and the discount percentage. If the primary term of payment doesn’t include any discounts, the value in % field should no be edited, but instead, left to 0,00. Please note that the number of days set in the term of payment fields cannot be smaller than the number of days set to cash discount fields.
- Cash discount (d / %): enter the number of days into the date field and set a discount percentage. For example, when setting value “7” in the date field and “3” in the % field, this means the payer is granted a 3 % discount from the total sum of the invoice, if the invoice is paid within 7 days of the invoice date.
If in customer register, or directly on a sales invoice, the term of payment is set to, for example 10 days and its dicount % to 0,00, while the cash discount is set to 7 days and its discount % to 3,00 the term of payment and cash discount will be shown on the invoice template as follows:
Terms of payment:
10 days net
7 days -3.00 %
These two-part payment terms can be saved (or modified) for several business partners at once using the Import business partner data or Edit multiple business partners functions.
Viewing cash discounts on Business partner report
- Cash discounts set for customers and suppliers in the register can be viewed through Business partner report found in Registers > Register reports.
- When selecting Term of payment and Cash discount in the Register data section of the search criteria, Term of payment and Cash discount columns will be included in the search results, both showing the amount of days and the percentage.
- When selecting Detailed report as the report’s printing format, each business partner’s basic info view can be accessed directly through the report.
Using cash discounts on sales invoices
Sales invoice and order
- If an invoice is created based on register data, payment terms saved in the customer register are imported into the invoice by default. The Term of payment (day / %) and Cash discount (day / %) fields can also be edited on the invoice, if necessary.
- The value of the discount will be automatically calculated based on the invoice total sum and the discount percentage, and is shown in the amount field next to day and % fields.
- When the invoice is saved, the total sum will be shown in the Invoice view’s Invoicing information section, both without and with the cash discount.
- Both payment terms (the primary term and the one with cash discount) will appear on the invoice template.
- Details of the cash discount, due date and sum after the cash discount are shown at the bottom of the invoice, below invoice rows. For example: The cash discount amount is EUR 18.45. Payable by 5 August 2019 EUR 596.55, otherwise according to the invoice sum.
Purchase invoice and order
- If an invoice is created based on register data, payment terms saved in the supplier register are imported into the invoice by default. The Term of payment (day / %) and Cash discount (day / %) fields can also be edited on the invoice, if necessary.
- The value of the discount will be automatically calculated based on the invoice total sum and the discount percentage, and is shown in the amount field next to day and % fields.
- When the invoice is saved, the total sum will be shown in the Invoice view’s Invoicing information section, both without and with the cash discount.
- Both payment terms (the primary term and the one with cash discount) will appear on the invoice picture.
- Details of the cash discount, due date and sum after the cash discount are shown at the bottom of the invoice, below invoice rows. For example: The cash discount amount is EUR 18.45. Payable by 5 August 2019 EUR 596.55, otherwise according to the invoice sum.
Payments and accounting corrections
Removing sales invoice from open invoices
When a payment for the sales invoice is received in the reference payment file and the payer has used the correct reference number, the payment will be automatically allocated to the invoice. If the sum of the payment transaction is not equal to the total sum of the invoice it’s allocated to, and cash discount processing is in use, Procountor will check if the following conditions apply:
- Is there a cash discount set for the invoice the payment is allocated to
- Is the difference between the sum of the payment and invoice total sum equal to the amount of cash discount
- Is the payment date of the reference payment equal to or prior to the cash discount due date
If all the conditions mentioned above apply, Procountor will generate an additional payment transaction (with the sum of the cash discount) to the invoice and the invoice status will change to Paid, instead of Paid elsewhere.
Adjusting the accounts for sales discounts
If the automatic cash discount processing is realised as described below, an adjusting entry is automatically generated on the reference payment’s accounting page. This adjusting entry removes the cash discount from Accounts receivable and enters the discount amount into Discounts given, specified by tax rates. Thus, cash discounts will be entered to the month during which the payment was received.
If the customer has made the payment using an incorrect reference number and the payment has not been automatically allocated to the invoice, the payment can be allocated to the correct invoice using the Edit reference payment function. Procountor will then process the cash discount automatically as described above.
Payment of purchase invoices
When a purchase invoice that includes a cash discount is queued for payment on the Payment view, additional information on the cash discount will be shown on the Payment view’s Cash discount section. The details shown are the cash discount amount, cash discount due date and total sum payable after the cash discount.
By default, the amount in the Pay field is the total sum or total open sum of the invoice, meaning that cash discount is not automatically deducted from the Pay field’s sum. If the cash discount is meant to be used when paying the invoice, the payable sum after the cash discount needs to be manually set into Pay field and the cash discount due date in the Payment date field before clicking on the Pay button.
Removing purchase invoice from open invoices
When the payment date’s bank statement is received in Procountor, the payment transaction will be automatically allocated to the invoice, given that outgoing payments are specified on the bank statement and the bank has returned an internal allocation id on the bank statement (or, that reference number has been used in the payment).
If the sum of the payment transaction is not equal to the total sum of the invoice it’s allocated to, and cash discount processing is in use, Procountor will check if the following conditions apply:
- Is there a cash discount set for the invoice the payment is allocated to
- Is the difference between the sum of the payment and invoice total sum equal to the amount of cash discount
- Is the payment date of the payment transaction equal to or prior to the cash discount due date
If all the conditions mentioned above apply, Procountor will generate an additional payment transaction (with the sum of the cash discount) to the invoice and the invoice status will change to Paid, instead of Paid elsewhere.
Adjusting the accounts for purchase discounts
If the automatic cash discount processing is realized as described above, an adjusting entry is automatically generated on the bank statement’s accounting page. This adjusting entry removes the cash discount from Accounts payable and enters the discount amount into Discounts received, specified by tax rates. Thus, cash discounts will be entered to the month during which the payment was debited.