Hi, I have just read the article Settlement Discounts on Supplier Invoices regarding supplier settlement discount and how to account for this net when creating a supplier invoice.
My question is how would you account for a supplier settlement discount gross. So our supplier offers 2% early settlement discount gross paid within 30 days.
(The answer is probably blinding obvious, however I can’t see the wood for the trees today!)
Any help would be much appreciated.
If it is gross you can still do this in the same way by adding the negative line but you would just have to work out the 2% and enter that value in the total column, this would then work out the VAT and Net amounts for you.
Hope this helps
Hi Beth this is great, just tried an it works well. My additional question would be, that in our industry if you don’t settle a given invoice within 20 days then that invoice defaults back to a full value for that month. So if it’s a large invoice, cash flow might not afford you the opportunity to settle that within 20 days and receive 2% discount.
In that scenario, especially if the accounts have been locked down (VAT, Year End etc…) how would you then amend the invoice to account for the full invoice value.
If the invoice has been locked down then the best thing to do would be to credit the invoice in full and then create the invoice again with the correct figures. Make sure that the dates are the same as the original and then any adjustments needed for the VAT return would automatically be picked up
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