ERPAG 5.1
Set Up Early Payment Discount
What is an early payment discount? How to handle Write off and Credit Notes.How to implement different case scenarios using Sale Orde, Terms of payment and Advanced or Prepayment.
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1. Introduction
Imagine a case: We have a general agreement with customers to give them the payment terms of NET 30 (ie the payment deadline is 30 days from the date of the invoice), but we want to motivate our customers to pay before the due date. This is called “Early Payment Discount”.
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2. Terms Of Payment
We will take an example where we give a 2% discount if the customer pays within 10 days after the invoice was issued, while his payment period is 30 days. This example has an almost global standard name “2/10 NET 30”.
In ERPAG, we will set up as shown in the picture. This indicates that credit note will automatically be generated when the payment is detected.
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3. Sales Order Payment
We will create the Sales Order where the terms of payment are indicated as in our example (the value of the document is 170.00).
When we “record payment”, we check whether the conditions are met for “early payment discount”.
In our case, we will enter the amount reduced by 2%.
ERPAG automatically created a credit note and the Sales Order got status – PAID.
Note: The Credit Note amount will always be the difference between the paid amount and the amount of the document. If in our case the amount of payment was 169.00 then the amount of Credit Note would be 1.00. That is, if the amount was 170.00 then ERPAG would not create a Credit Note. By doing this, we avoid the problem of rounding up decimal numbers, and the documents getting ‘overpaid’ status.
4. Advance payment – Sales Order
If we have a payment before issuing an invoice (for example, most of the sales via webshops are charged before delivery), when the Invoice is generated, ERPAG will check the conditions for payment discount.
The look of the Sales Order after it has been Invoiced.
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5. The difference between the “Credit note” and “Write-off”
Within the ‘Record payment’ option we also have “Write-off”.
This option is only used to write off a small amount that is unpaid, usually due to decimal rounding.
That is, the unpaid amount goes to our expense and no tax is deducted. While with the Credit Note, a tax deduction is also made, and accounts receivable are also reduced.
Example: Journal voucher – Write-off
Example: Journal Voucher – Credit Note
6. Bulk Action
If we “record payment” through the “bulk action”, since we do not know the exact amount, the amount paid will always be according to the amount of the document. That is, through such bulk action, ERPAG will not automatically create a Credit Note.
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2018. ERPAG Inc.
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