Settle a partial customer payment that has multiple discount periods

This article shows how partial customer payments are settled when there are multiple discount periods.

Fabrikam offers customer 4031 two cash discount periods. The customer receives a 2-percent cash discount if the invoice is paid in five days and a 1-percent cash discount if the invoice is paid in 14 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 4031. When he reviews the cash discounts for this invoice, Arnie sees that customer 4031 receives a 20.00 discount if the invoice is paid by June 30. If the invoice is paid by July 9, the customer receives a 10.00 discount.

Cash discount date Cash discount amount Amount in transaction currency
6/30/2015 20.00 980.00
7/9/2015 10.00 990.00
7/25/2015 0.00 1,000.00

Arnie can view this transaction on the Customer transactions page.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
FTI-10030 Invoice 6/25/2015 10030 1,000.00 1,000.00 USD

Partial payment before the cash discount date

On June 28, Customer 4031 makes a partial payment of 294.00. Because June 28 is within the first cash discount period, the customer takes a 6.00 discount. On the Settle transactions page, the Cash discount amount value is 20.00, and the Cash discount amount to take value is 6.00.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Selected Normal FTI-10030 4031 6/25/2015 7/25/2015 10030 1,000.00 USD 294.00

Discount information appears at the bottom of the Settle open transactions page. If you don't change the Amount to settle value to 294.00, the Cash discount amount values that appear will differ. However, 6.00 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 6/30/2015
Cash discount amount 20.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take 6.00

After Arnie posts the payment, the invoice balance is 700.00.

Partial payment before the second cash discount date

On July 8, the customer pays the rest of the invoice amount. A 7.00 discount (1 percent) is taken, because the payment was made within the second cash discount period.

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 Normal FTI-10030 4031 6/25/2015 7/25/2015 10030 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 30.00
Use cash discount Normal
Cash discount taken 6.00
Cash discount amount to take 7.00

The invoice balance is now 0.00. Arnie views the information on the Customer transactions page.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
FTI-10030 Invoice 6/25/2015 10030 1,000.00 0.00 USD
ARP-10030 Payment 6/28/2015 294.00 0.00 USD
DISC-10030 Cash discount 6/28/2015 6.00 0.00 USD
ARP-10031 Payment 7/8/2015 693.00 0.00 USD
DISC-1031 Cash discount 7/8/2015 7.00 0.00 USD