The Accounts Receivable system allows you to use discounts when posting invoices and/or payments for customers.
If you elect to use discounts, the system will automatically calculate discount amounts and dates based on data stored in the HQ Payment Terms form. The AR Company Parameters program provides three discount options that determine if and where discounts can be posted:
Discounts Not Used – No discounts are used.
Allow Discounts on Invoices & Receipts – Discounts may be posted in both the Invoice Entry and Cash Receipts programs.
Allow Discounts Taken on Receipts – Discounts may be posted only when posting payments in Cash Receipts.
If you are calculating discounts at the time of invoice entry, the calculation is considered an 'offered' discount. The discount amount is not subtracted from the total due at this time because it cannot actually be taken until the payment is posted.
When posting the payment, the offered discount does not automatically default into the Disc Taken field unless the payment is made before the specified discount date and the amount of the payment covers the entire balance due. If payment is not made before the discount date, the discount can still be taken, but you will need to enter the amount manually. Although the discount offered is typically the discount amount taken at the time of payment posting, you are not required to use the same amount; default can be overridden if desired.
The Allow TaxDisc on Invoices & Receipts option (in AR Company Parameters) allows you to designate whether you can take tax discounts when posting invoices and/or cash receipts. However, you can only use this feature if you allow discounts on invoices and/or receipts.
If you are using the Allow Discounts on Invoices & Receipts option (also in AR Company Parameters), tax discounts can be calculated during invoice entry, then applied when posting cash receipts. When entering invoice transactions (AR Invoice Entry), the Tax Disc will default based on the line's tax rate (determined by tax code) times the discount offered. For example, a $100 invoice with $5 tax (5%) and a discount of $3 (3%) would also have a Tax Disc of $.15 (5% x $3).
The tax discount is offered in the same manner as the payment discount. It is only actually applied when posting the cash receipt in AR Cash Receipts. If you initialize the payment (in AR Initialize Receipt) and check the Apply Discounts (if applicable) option, the system will automatically take the tax discount along with the payment discount, as long as the discount date is within the period specified by the customer's payment terms. If you are entering payments manually, you can apply the tax discount by accessing the invoice line, entering the payment amount in the Amount Applied column, then pressing Ctrl + E to apply the tax discount. Typically, you will want to take the tax discount when a payment discount has been offered; however, it is possible to take a tax discount even if payment and tax discounts were not offered on the invoice.