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Post Info TOPIC: Discounts received
BackOfficeGroup


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Discounts received
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Hi guys

Here's one for you.
A debtor deducts 3% if it pays your sales invoice within 120 days. When you then raise the c/n for this discount on your ledger, do you work out the VAT on this portion. I would but just want to make sure. This is not our terms but the terms that the debtor has adopted, which we have to abide by. Obviously this will be a cost posted to the P&L.

P

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RobH


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Hi Guru Phil!

Yes I think you will have to credit the vat on the discounted amount.

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Rob
www.accounts-solutions.com
Wella


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Hi Philip

Harsh terms for a debtor to dictate!!

Just a thought, can the invoices be raised with VAT calculated on the early settlement discounted value?

Bill

PS Likewise, welcome Guru worship.gif

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BackOfficeGroup


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Thanks guys, wow, Guru status at last!!! Yippee.....

Bill

I thought about that, as obviously the VAT would be calculated on the lower amount etc etc, but I have not seen the terms and it's not possible to do that on the system that is used.....but its the debtor who decides how much to pay and one person said it was 3%, another said it was 3.5% and when working it out, it never does, so i just wait and c/n the difference!

P



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Rhianrach


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Wella wrote:

Hi Philip

Harsh terms for a debtor to dictate!!

Just a thought, can the invoices be raised with VAT calculated on the early settlement discounted value?

Bill

PS Likewise, welcome Guru worship.gif


I don't know if this is what your asking smile but yes you calculate the vat on the reduced amount regardless of whether the discount is taken.

 



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Steve
additionsbookkeeping


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When you are offering (or having imposed on you!) a settlement discount you must calculate the VAT on the entire invoice as though the discount was being taken. It doesn't actually matter whether they take it or not you still have to work it out as though they had.

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semsley


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I agree that the original invoice should have VAT based on the discounted figure irrespective of whether or not the customer avails themselves of the discount.  There should also be a note on the invoice stating if invoice is settled within 120 days a 3% discount is allowable (or words to that effect).

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Advice from beyond the grave!!!

E&OE
BackOfficeGroup


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I agree to all of the suggestions, however its not us that is giving the discount, it is them taking it!

I need to see the contracts first to see what was agreed.

Have a good weekend all....

P

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steve99.9


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Hi

They take 4 MONTHS to pay and want 3% for the privelege

Someones having a laugh !!

They must be Bl--dy good customers

Steve

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attilabenko


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Hi Phil,

I think it would be a good idea offering some sort of credit control services to your client ;)

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Attila
BackOfficeGroup


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Attila

Already look after the whole back office function! We only found out about the discount they apply from our credit controlling.....bit backward but thats the education we need to implement....

Steve

They are a new customer but are spending their money big time!!

P

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attilabenko


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Hi Phil,

If you already charging them for that than it's great!!!
At the end of the day there is nothing wrong with these sort of things, they just make more work and more money for us!

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Attila
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