• Registered: 12/25/2007
  • Posts: 2,448

Topic: Moving prompt payment discount entry to sales/customer order

Currently additional discount for invoices paid in advance can be recorded during  customer/supplier payment stage. This seems to be somewhat unhandy, as the right operation order in case of customer invoice paid in advance is usually as follows:
. During sales ordering customer decides whether he want to pay in advance, or prefers delayed payment
. Customer receives sales order copy or proforma invoice with stated additional discount available in case of advance payment.
. Customer payment is registered in system
. Final customer invoice is issued with prompt payment discount included.

Therefore we want to move prompt payment discount input from customer/supplier payment screen to order entry page, to be used during invoicing. This way we can also make proper use with Prompt Payment Discount Percent customer parameter, which currently is not used in invoice calculations, but only informative.
Any comments are welcome.

Janusz

  • joe
  • Administrator
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  • Registered: 03/15/2007
  • Posts: 5,107

Re: Moving prompt payment discount entry to sales/customer order

I can see the following usage:

1. You have sent a customer invoice on $100.
2. You get a payment from your customer on $98. Instead of having a remainder of $2, you dicide to give him a discount of $2 and a payment of $98.
3. The invoice gets fully allocated.

You may have a normal payment terms of 10 days net to a supplier. If you pay in advance (cash) you get a discount of 2%.
1. Supplier Invoice $100.
2. You pay at once $98 and a discount of $2.
3. The invoice gets fully allocated.

/Joe

  • Registered: 12/25/2007
  • Posts: 2,448

Re: Moving prompt payment discount entry to sales/customer order

Well, I'm still not sure if those scenarios are examples of proper way of doing business, or how the money flows between friends smile. First case (if not identical to second) seems to be customer mistake, which  can be fixed with next payment.

As far as I understand idea of prompt payment, giving this kind of discount make sense if the payment is received _before_ goods are delivered to customer. This is how some  companies with only virtual inventory do their business via internet. The aim is to minimize time of delivery and stock costs. In most cases customer know whether he want to pay in advance at the ordering time, but in _any_ case some deadline have to be set for prompt payment (as subject to discount), to avoid unneeded conflicts. So if not at ordering stage, the deadline should be set at invoicing time. Otherwise you have to pay taxes calculated for total invoice value, also for discount amounts you have  never received.

Janusz

  • From: India
  • Registered: 11/09/2009
  • Posts: 115

Re: Moving prompt payment discount entry to sales/customer order

Hi,

I am curious on how is prompt payment discount working now.

Thanks

Chaitanya
  • joe
  • Administrator
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  • Registered: 03/15/2007
  • Posts: 5,107

Re: Moving prompt payment discount entry to sales/customer order

On a costumer / supplier you can set a prompt payment percent. If the customer has a 2 percents deduction and he pays let us say $98 instead of expected $100 for an invoice. You will see in the Customer Payment that the customer has a 2% deduction. You can now decide to set the payment to $98 and the discount to $2. Btw. you can always do this operation despite the discount set on the customer.
The total amount of $100 is going into the accounts receivable, but only $98 into the bank account. The $2 is going into the account for customer prompt payments.
The same thing happens on the Supplier Payment, only the other way around.

/Joe