The business uses discounts for prompt payment etc. At the moment we have this setup using the terms discount functionality. This works quite well. I believe this is the best way?
The difficulty comes for when unapplied cash/ on account is used. For example;
- Receive the payment but no remittance, so the receipt can not be allocated to invoices.
- The receipt for £1000 with 5% discount on invoice value of £1050.
- Post the £1000 to on account.
- We now want to allocate the £1000 against an invoice balance of £1050.
I don’t believe the system carries the discount automatically to match off the invoices so leaving an overall balance £50. I think we can enter the discount manually per line but this is very time consuming. I know the help says that the discount won’t apply to credit memos etc.
I was just wondering whether we have the correct setup. If we have ,the only other option is to write a customisation to automatically / prorata the discount based on the selection of invoices?
Thanks in advance
I did a small test, let me know if this is not what you are trying to do.
Posted an Invoice for $1000 with terms discount of 5% on prompt payment.
Posted an on account cash receipt for $950
Created a new CR Invoice Payment for $1(since it cannot be 0), go to Invoice Selection, here you need to select the credit memo first so the amount is added to your Unapplied Amount, then select the $1000 Invoice and Cash Applied is correctly set to $950, Discount to $50 and Allocated Amount to $1000.
Is this what you are trying to do or did I miss something?
Big thanks for testing. Will try it tomorrow, I take then we just write off the $1.
Will let you know, once I have tested. Which version are you on?
Big thanks, that worked. That solves a problem for us.
So how do you reconcile the cash bank account balance. Did you receive £950 or £1000 from your customer.
I think it was £1000, no?
No the invoice value is $1000 and we received $950 as per the discount of 5%.
correct you are.
I was mixing up the prior example details.
you could also use Apply Credit Memo and apply the $950 to the invoice,
Then use Write-Off Adjust to consume the remaining $50 balance.
I guess it’s just a matter of preference.
True, but we need to monitor the discount. Also there maybe situations where the discount varies from the term. we need to record that. Also for cashflow etc.
my preference - and it is just that, a preference - is not to use an option which requires a dummy receipt/write-off
but the discounting logic is cash receipts is surely helpful