Settle a partial vendor payment before the discount date with a final payment after the discount date

This article walks you through a scenario where multiple partial payments are made, some within the cash discount period and others outside the cash discount period.

Fabrikam purchases goods from vendor 3057. Fabrikam receives a cash discount of 1 percent if the invoice is paid in 14 days. Invoices must be paid in 30 days. The vendor also lets Fabrikam take cash discounts on partial payments. The settlement parameters are located on the Accounts payable parameters page.

Invoice on June 25

On June 25, April enters and posts an invoice for 1,000.00 for vendor 3057. April can view this transaction on the Vendor transactions page.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10020 Invoice 6/25/2015 10020 1,000.00 -1,000.00 USD

Partial payment on July 2

On July 2, April wants to settle 300.00 of this invoice. The payment is eligible for a discount, because Fabrikam takes discounts on partial payments. Therefore, April pays 297.00 and takes a 3.00 discount. She creates a payment journal and enters a line for vendor 3057. She then opens the Settle transactions page, so that she can mark the invoice for settlement.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Selected Normal Inv-10020 3057 6/25/2015 7/25/2015 10020 -1,000.00 USD -297.00

Discount information appears at the bottom of the Settle open transactions page.

Cash discount date 7/09/2015
Cash discount amount -10.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take -3.00

April then posts the payment. The invoice now has a balance of 700.00. April can view this transaction on the Vendor transactions page.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10020 Invoice 6/25/2015 10020 1,000.00 -700.00 USD
APP-10020 Payment 7/1/2015 297.00 0.00 USD
DISC-10020 Cash discount 7/1/2015 3.00 0.00 USD

Remaining payment on July 15, Use cash discount = Normal

April pays the rest of the invoice on July 15, which is after the discount period. On the Settle open transactions page, no discount amount is displayed in the Estimated cash discount field, and the value in the Cash discount amount field is 0.00. When April pays the remaining 700.00, no additional discount will be taken.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Selected Normal Inv-10020 3057 6/25/2015 7/25/2015 10020 -700.00 USD -700.00

Discount information appears at the bottom of the Settle transactions page. April can see that she has already taken a 3.00 discount.

Cash discount date 7/09/2015
Cash discount amount 0.00
Use cash discount Normal
Cash discount taken -3.00
Cash discount amount to take 0.00

April then posts the payment. When she opens the Vendor transactions page, she sees that the invoice has a balance of 0.00. She also sees that there are two payments. One payment is for 297.00 and has a 3.00 discount, and the other payment is for 700.00.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10020 Invoice 6/25/2015 10020 1,000.00 0.00 USD
APP-10020 Payment 7/1/2015 297.00 0.00 USD
DISC-10020 Cash discount 7/1/2015 3.00 0.00 USD
APP-10021 Payment 7/15/2015 700.00 0.00 USD

Remaining payment on July 15, Use cash discount = Always

If the vendor lets April take a discount even though she is paying after the discount date, she can change the value in the Use cash discount field to Always. The Calculate cash discounts for partial payments setting is overridden, and the discount is taken. The payment amount is 693.00, and the discount is the remaining 7.00.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency debit Amount in transaction currency credit Currency Amount to settle
Selected Always Inv-10020 3057 6/25/2015 7/25/2015 10020 700.00 USD -693.00

Discount information appears at the bottom of the Settle transactions page.

Cash discount date 7/09/2015
Cash discount amount 7.00
Use cash discount Always
Cash discount taken -3.00
Cash discount amount to take -7.00

April then posts the payment. When she opens the Vendor transactions page, she sees that the invoice has a balance of 0.00. She also sees that there are two payments. One payment is for 297.00 and has a 3.00 discount, and the other payment is for 693.00 and has a 7.00 discount.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10020 Invoice 6/25/2015 10020 1,000.00 0.00 USD
APP-10020 Payment 7/1/2015 297.00 0.00 USD
DISC-10020 Cash discount 7/1/2015 3.00 0.00 USD
APP-10021 Payment 7/15/2015 693.00 0.00 USD
DISC-10021 Cash discount 7/15/2015 7.00 0.00 USD