Work with cash discounts from vendors
A vendor can offer you a cash discount for paying an invoice before the due date.
For example, you enter an invoice for 100.00 that specifies a 2% cash discount if the vendor pays the invoice within 10 days. The due date terms are 30 days. If a payment proposal uses the cash discount as a criterion for selecting an invoice, and if you run the proposal on or before the cash discount date, Finance selects the invoice for payment and creates a payment for 98.00.
Additionally, you can receive a cash discount for a one-off payment that the vendor creates manually.
Partial payments with cash discounts
When you make a partial payment, you might plan to make another partial payment to fully settle the invoice. To take a cash discount for a partial payment, set the Calculate cash discounts for partial payments option to Yes on the Accounts payable parameters page.
For example, you receive a 2% cash discount if you pay the invoice within 10 days after the vendor issues it. The vendor posts an invoice for 100.00. If you make a payment of 49.00 within 10 days, the vendor enters a debit of 49.00 in a payment journal. When you settle the partial payment on the Settle open transactions page, 1.00 appears in the Cash discount amount to take field.
If you enter a partial payment and leave the full invoice amount in the Amount to settle field, the system automatically recalculates the Cash discount amount to take field when you post the transactions.
Credit notes with cash discounts
You might return some items on an invoice and receive a credit note.
If you take a cash discount on the original invoice, you can subtract the value of the discount and receive a refund for the correct amount.
If the Calculate cash discounts for credit notes option is set to Yes on the Accounts payable parameters page, the system automatically calculates the discount for the credit note.
For example, you receive a 2% cash discount if you pay the invoice within 10 days after the vendor issues it. The vendor posts an invoice for 100.00. If you return the goods and receive a credit note, you can enter the credit note for the full amount of the original invoice (100.00), together with the 2% cash discount that's defined in the credit memo. When you view the credit note on the Settle open transactions page, 98.00 appears in the Amount to settle field, and -2.00 appears in the Cash discount amount to take field. The system posts the discount amount to a cash discount account.