From April 2015, the way that VAT should be calculated when raising an Invoice has changed. Please see VAT on discounts topic for further information before reading this topic. The details in this topic are, in part, superseded but have been left as-is for legacy reasons.

These initial settings are made when setting up your system and/or in Company Home Defaults, then as Customers are added, they will automatically be given these Terms. For GB databases, the default is to Adjust Settlement Discount at point of payment; for non-GB databases the default is to Exclude Settlement Discount from VAT Calculation.

Settlement Discount is applied to transactions entered in Sales/Purchase Ledgers.

The calculation of VAT depends on whether your Data file was set up to Adjust, Include, or Exclude any Settlement Discount in the VAT calculation.

These defaults are used when posting Remittances and Bulk Receipts for transactions with Settlement Discount offered.

When a new Customer record is inserted then the Discounts will be copied from the Customer Terms Template. Any or all of these can be changed for each customer.

The default Discount Account is shown on the Batch Selection window for these transactions. This can be changed. The Receipt/Payment Date defaults to the system date but can be changed.

If a transaction is selected for Receipt/Payment and has been updated with Settlement Discount details then:

If the Receipt/Payment Date falls within the Settlement Discount Dates, the available percentage will be shown automatically.

If the transaction is selected by highlighting and double-clicking, then the Discount Value and Receipt/Payment Value will be calculated automatically.

Either Value can be changed.

The Set % button will switch on/off the available discount details.

If the Receipt/Payment Date falls outside the Settlement Discount Dates, Discount allowed/taken must be calculated and entered manually.

Settlement Discount allowed/taken must be calculated and entered manually, analysed to the Discount Analysis record as an additional transaction detail line. The total transaction can then be allocated against the outstanding Invoice, that is shown including discounts that have been offered.

Total Discount The calculated Value appears on the Totals window of the order, and is updated as further Detail lines are added. It cannot be changed.

The Discount Value appears in the Totals section of the Invoice/Order below the Net Value and before VAT is added.

When the transaction is posted to the Sales/Purchase Ledger, the Discount is applied proportionately to each Detail line, and the Analysis Code of each Detail line is updated with the value after Discount.

Line Discount Percentage and Value appear on the detail line. Either of these can be changed.

NB If both are changed and the Values do not correspond, then the £ value will appear on the Invoice/Order and be updated.

The Discount Value appears on each line of the Invoice/Order.

The Net Value of each line and of the Invoice/Order is after the discount has been applied.

When the transaction is posted to the Sales/Purchase Ledger, the Analysis Code of each detail line is updated with the value after discount.

Settlement Discount No values appear on the Orders as they are being entered.

A note is added to the Sales Invoice produced from a Sales Order giving details of the settlement discounts available – discount values, amounts to be paid and by which dates.

Discounts are applied to transaction order entries in the following way:

N.B. Discounts are copied onto the Order Header (Terms) from the Customer/Supplier record Terms window. Any of them can be changed when the Order is created, or when edited from a batch.

Any Quantity Ranges set with additional Discounts will be applied before the above Customer/Supplier Discounts, providing that the Customer/Supplier record has been set as a Quantity Price type in the Terms.

If an alternative Price Line is selected for a Sales/Purchase Order then the Customer/Supplier Discounts will be applied to the selected price.

If an alternative price is selected for a Sales Order from a Price Matrix record then the Customer discounts will be applied to the alternative price.

When a Sales Order is created from a Costing Project, Customer Discounts will be applied after the values from the Project have been saved down into the SOP Batch on an order.

i.e. If a Costing transaction for £1000 is selected to be included on an SOP order, a Customer with a Line Discount of 10% set will receive an invoice for £900 + VAT.