Cash discount processing

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.

A new cash discount functionality has been published in Procountor’s V82 version update. It allows 1-3 cash discount options instead of the one option for sales and purchase invoices, sales order and offer, purchase order, group invoice, contract invoice, work item invoicing and customer and supplier registers.

We have also changed the payment -view of purchase invoice so that cash discount is automatically calculated to the invoice payment amount. Before that user needed to change the cash discounted payment amount manually. The automatic cash discount calculation to payment amount also allows users to use the Payment of multiple invoices -functionality i.e. pay multiple purchase invoices with cash discount at the same time. This was not possible before. 
 
Generally, the new cash discount works the same way as the old cash discount but now instead of one cash discount option it is possible to set 1-3 cash discounts. Cash discount options are visible in the same views as the old cash discount. We have automatic accounting working similar way as with one cash discount option. Now automatic accounting checks are made for the three cash discount options if they are set on the invoice. 
 
To see the cash discount feature in Procountor user needs to check the cash discount check boxes (Cash discount for sales and Cash discount for purchases) in Usage settings.

 

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 / %):
  • There are Days and % - fields for three options of cash discount.
    • In the Day –field enter the number of days 
    • In the % -field enter the cash discount % 
  • Days fields should be filled in ascending order e.g. 5,6,7.
  • Percentage fields should be filled in descending order e.g. 7,6,5. If the order is wrong the field turns red.

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 and the other field is set to 8 days and its discount % to 2,00 , the term of payment and cash discount will be shown on the invoice template as follows:

Terms of payment:

10 days net

the available cash discount options:

7 days, -3.00 %, due date xx, discount xx, sum to pay xx

8 days, -2.00%, due date xx, discount xx, sum to pay xx

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.

 

Editing multiple business partners' cash discounts

• It is possible to edit multiple business partners' cash discounts at the same time by choosing  Registers > Business partners -view. Push Edit multiple -button and Search business partners. Select the business partners you want to edit, and push Edit business partners. In Select fields to be edited -pop up view you can find Days and % -fields for three cash discount options.

 

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

• 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.
• Sales invoice has fields for three options of cash discount. 
• In the Day –field enter the number of days 
• In the % -field enter the cash discount % 
  • Days fields should be filled in ascending order e.g. 5,6,7. Percentage fields should be filled in descending order e.g. 7,6,5. If the order is wrong the field turns red and user gets an error message.  
  • Both Days and % -fields need to be filled otherwise the fields turn red and user gets an error message. 
• Cash discount options need to be in order i.e. if only one cash discount is in use fields are filled from the top.
•  Discount sum and Amount due are calculated automatically.  
• Cash discount Days cannot exceed the Term of payment days.  
• When the cash discount sum and the term of payment is set the total sum will be shown in the Invoice view’s Invoicing information section, both without and with the cash discount.

 

The invoice image

• the invoice image shows the available cash discount options
• In the Term of Payment is added the text Cash discount available.
• Details of the cash discounts, due dates and sums 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.

 

Sales order and offer: 

• Sales order and offer has fields for three options of cash discount. 
• Similar to sales invoice.
• Sales order and offer can be changed and/or copied to sales invoice with three cash discount options.

 

Group invoice 

• There are Days and % - fields for three options of cash discount to Group invoice -view.

 

Contract invoice

• It is possible to have three cash discount options on contract invoice.
• When user generates the invoice they can manually add 1-3 cash discount options to the invoice.

 

Work item invoicing: 

• It is possible to have three cash discount options on invoices that are generated from Work item invoicing (Registers>Work item invoicing).

 

Using cash discounts on purchase invoices

Purchase invoice 

• 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.
• Purchase invoice has fields for three options of cash discount.
  • In the Day –field enter the number of days.
  • In the % -field enter the cash discount %.
  • Days fields should be filled in ascending order e.g. 5,6,7. Percentage fields should be filled in descending order e.g. 7,6,5. 
  • If the order is wrong the field turns red and user gets an error message. 
  • Both Days and % -fields need to be filled otherwise the fields turn red and user gets an error message.  
• Discount sum and Amount due are calculated automatically.  
• Cash discount Days cannot exceed the Term of payment days. 
• Cash discount options need to be in order i.e. if only one cash discount is in use fields are filled from the top. If two cash discounts are in use first and second row of cash discount are filled.
• The purple frame points the current available cash discount option and it moves to the next one if the previous cash discount option wasn't used.
• Invoice sum on the top right corner of the Invoice -view calculates the invoice sum without and with cash discount

 

Invoice Image

• The invoice image shows the available cash discount options and in the Term of Payment is added the text Cash discount available. (as long as there is cash discount available). 
• Details of the cash discounts, 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 148,80. Payable by 20.12.2023 EUR 4811,20, otherwise according to the invoice sum.
  • The cash discount amount is EUR 148,80. Payable by 20.12.2023 EUR 4811,20, otherwise according to the invoice sum.

 

Verification and approval of purchase invoice

A notification message via email is sent when invoice is sent to circulation. A notification message include also a text: Invoice is subject to Cash discount, when the cash discount is in use on that invoice. 

A Text (Cash discount available) is visible on invoice Verification –view when cash discount is available. This way the availability of Cash discount is more noticeable for the invoice verifier and/or approver.

 

Payment of purchase invoices

• On purchase invoice Payment -view the current available cash discount is automatically calculated to the payment amount in Pay -field.
•  User can change the payment amount manually if needed.
• In the Pay -field is Text Cash discount applied / Cash discount available which indicates the status of cash discount.
  •  If user changes the payment amount manually to be more than the invoice's original payment amount the text will change to Overpayment and the Pay field turns red.
•  It is also possible to manually change the payment date.
  •  If there is cash discount available for the changed payment date it is automatically applied i.e. Pay -field updates the correct amount with cash discount and the Cash discount -text in Invoice info -panel changes accordingly.

 

Purchase order

• Purchase order has fields for three options of cash discount.
• There is no purple frame to indicate the current available cash discount option on purchase order otherwise it is similar to purchase invoice.
• Purchase order can be changed and/or copied to purchase invoice with three cash discount options.

 

 Payment of multiple invoices

• Payment of multiple invoices is possible for purchase invoices that have cash discount. 
• Multiple invoices can be paid on the Receipt search view (Search > Receipt search) by clicking Payment button, and then choosing the Payment of multiple invoices function from the drop-down menu.
• Invoices with cash discount are visible on Payment of multiple invoices –view in two  columns : Cash discount due date and Invoice sum with cash discount.  
• By default the Payment date for cash discount invoices is the first available cash discount due date. If the invoice is not paid on the first option's due date it changes to the next available due date and the invoice sum changes to the next invoice sum with cash discount. When all cash discount options' due dates have passed the due date will change to invoice's original due date and the invoice sum will change to invoice's original invoice sum.  
• Payment date can be manually changed and the invoice sum will change accordingly if there is a cash discount option available or not. 
•  If Use pay date -checkbox is selected all invoices will be paid on the set date. Invoice sum of cash discount invoices will change accordingly. 

 

Search cash discount invoices 

You can search for cash discount invoices through Search > Receipt search. It is possible to search cash discount invoices with all search types: Invoices, Open invoices, Invoices to approve and Invoices to pay.  

The search fields for Cash discount due date can be found in Receipt search's Advanced search -view. Invoices can be searched with similar selections as the other searches on this view: None selected, This week, Past week, This month, Past month, Past 6 month, This year, Past year, Custom.  

The Cash discount due date -search is visible on Advanced search view when Cash discount is activated for sales and/or purchase invoices in Usage settings.  

The columns related to cash discounts are Cash discount open amount (This column shows the cash discounted open amount for the invoice) , Cash discount and Cash discount due date .   

Cash discount open amount, Cash discount and Cash discount due date will change according to the cash discount due date and % in cases where there are several cash discounts in use on the invoice. When user wants to pay invoice with cash discount it will take the first option of the sum with cash discount, then second and third and finally if all cash discount options have passed their due date total sum (the original invoice sum without cash discount) of the invoice is the sum to pay. If the invoice's cash discount due dates are passed the three cash discount columns will be empty.  

 

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.

 

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.