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

This article discusses the effect of settling payments to invoices for customers. The scenario focuses on the effects in the subledger, not in General ledger.

Fabrikam sells goods to customer 4027. Fabrikam offers a cash discount of 1 percent if the invoice is paid in 14 days. Invoices must be paid in 30 days. Fabrikam also offers cash discounts on partial payments. The settlement parameters are located on the Accounts receivable parameters page.

Invoice

On June 25, Arnie enters and posts an invoice for 1,000.00 for customer 4027. Arnie can view this invoice by using the Transactions button on the Customers page.

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

Partial payment before the cash discount date

On July 2, customer 4027 makes a partial payment of 297.00 for the invoice. The payment is eligible for a cash discount, because Fabrikam offers cash discounts on partial payments, and the partial payment is made before the cash discount date. Therefore, customer 4027 takes a 3.00 cash discount. Arnie records the payment for customer 4027 by using the Payment journal. Arnie then opens the Settle transactions page, so that he can mark the invoice for settlement.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency debit Currency Amount to settle
Selected Normal FTI-10020 4027 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. If you don't change the Amount to settle value to 297.00, the Cash discount amount values that appear will differ. However, 3.00 will be taken as the cash discount when the payment is posted, because settlement automatically adjusts the **Amount to settle **value for you.

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

Arnie posts this payment. The invoice now has a balance of 700.00. The following transactions can be seen for the customer.

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

Remaining payment after the cash discount date

On July 11, which is after the discount period, customer 4027 pays the rest of this invoice. On the Settle transactions page, a discount amount doesn't appear in the Estimated cash discount field, and the value in the Cash discount amount field is 0.00. When customer 4027 pays the remaining 700.00, no additional discount is taken.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency debit Currency Amount to settle
Selected Normal FTI-10020 4027 6/25/2015 7/25/2015 10020 700.00 USD 700.00

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

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

If Arnie changes the value in the Use cash discount field to Always, the Calculate cash discounts for partial payments setting is overridden, and the cash discount is taken. The payment amount changes to 693.00, and the cash 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 FTI-10020 4027 6/25/2015 7/25/2015 10020 700.00 USD 693.00

Discount information appears at the bottom of the Settle open 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

Arnie changes the value in the Use cash discount field back to Normal, because he is not letting this customer take the remaining cash discount of 7.00. Arnie then posts the payment. When Arnie opens the Customer transactions page, he sees that the invoice has a balance of 0.00. He also sees that there are two payments. One payment is for 297.00 and has a 3.00 cash 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
FTI-10020 Invoice 6/25/2015 10020 1,000.00 0.00 USD
ARP-10020 7/1/2015 297.00 0.00 USD
DISC-10020 7/1/2015 3.00 0.00 USD
ARP-10021 7/11/2015 700.00 0.00 USD