Settle a partial vendor payment that has multiple discount periods

This article walks you through a scenario where multiple partial payments are made to a vendor that offers multiple cash discounts.

Vendor 3054 offers Fabrikam a cash discount of 2 percent if an invoice is paid in five days and a cash discount of 1 percent if the invoice is paid in 14 days.

Invoice

On June 28, April creates an invoice for 1,000.00 for vendor 3054. April can view this transaction on the Vendor transactions page.

Voucher Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10060 6/28/2015 10060 1,000.00 -1,000.00 USD

The following cash discount dates and amounts are available for this invoice.

Cash discount date Cash discount amount Amount in transaction currency
7/3/2015 20.00 980.00
7/12/2015 10.00 990.00
7/25/2015 0.00 1,000.00

Payment on July 2

On July 2, April wants to pay 300.00 against this invoice. She creates a one-off payment by using the Payment journal page in Accounts payable. She adds a line for vendor 3054 and enters a payment amount of 300.00. April then opens the Settle transactions page, so that she can mark the invoice that will be settled. She updates the value in the Amount to settle field to 300.00 and notices that the value in the Cash discount amount to take field is changed to 6.12. Because this payment is made in the first discount period, a discount of 2 percent is taken.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Normal Inv-10060 3054 6/28/2015 7/28/2015 10060 1,000.00 USD 300.00

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

Cash discount date 7/02/2015
Cash discount amount -20.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take -6.12

Because a cash discount is available, April wants to change the payment amount so that the total settled amount is 300.00 for both the payment and the cash discount. She changes the value in the Amount to settle field to 294.00 and notices that the value in the Cash discount amount to take field is changed to 6.00.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Normal Inv-10060 3054 6/28/2015 7/28/2015 10060 1,000.00 USD 294.00

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

Cash discount date 7/02/2015
Cash discount amount -20.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take -6.00

April posts the payment. On the Vendor transactions page, she can view the transactions. She sees that 300.00 has been applied to the invoice. This amount includes a discount of 6.00. Therefore, the remaining balance is 700.00.

Voucher Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10060 6/28/2015 10060 1,000.00 -700.00 USD
APP-10060 7/2/2015 294.00 0.00 USD
DISC-10060 7/2/2015 6.00 0.00 USD

Payment on July 8

On July 8, April makes an additional payment against the invoice. To enter the amount, she opens the Settle transactions page and then clicks the Cash discount tab. She sees the dates and amounts for the two cash discounts that are available. Because this payment is made in the second discount period, a discount of 1 percent, or 5.00, is available. This amount is calculated as half the 1-percent discount on 1,000.00, or half of 10.00.

Cash discount date Cash discount amount Amount in transaction currency
7/3/2015 20.00 680.00
7/12/2015 10.00 690.00
7/25/2015 0.00 700.00

April decides to pay 495.00 and take the 5.00 cash discount. Therefore, the total amount that is settled is 500.00.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Normal Inv-10060 3054 6/28/2015 7/28/2015 10060 1,000.00 USD 495.00

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

Cash discount date 7/12/2015
Cash discount amount -10.00
Use cash discount Normal
Cash discount taken -6.00
Cash discount amount to take -5.00

On the Vendor transactions page, April sees that the new balance is 200.00.

Voucher Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10060 6/28/2015 10060 1,000.00 -200.00 USD
APP-10060 7/2/2015 294.00 0.00 USD
DISC-10060 7/2/2015 6.00 0.00 USD
APP-10061 7/12/2015 495.00 0.00 USD
DISC-10061 7/12/2015 5.00 0.00 USD

Payment on July 20

On July 20, April creates a final payment for 200.00. No discount is taken, because the payment is made after both discount periods. The balance for the invoice is 0.00.

Voucher Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10060 6/28/2015 10060 1,000.00 -200.00 USD
APP-10060 7/2/2015 294.00 0.00 USD
DISC-10060 7/2/2015 6.00 0.00 USD
APP-10061 7/12/2015 495.00 0.00 USD
DISC-10061 7/12/2015 5.00 0.00 USD
APP-10062 7/20/2015 200.00 0.00 USD