Purchases - Settlement Discount

Purchases - Settlement Discount

INTRODUCTION

Many suppliers offer incentives to pay invoices with in certain period of time known as a Settlement Discount.
Agility works on 3 models which are explained below.

Settlement Discount


This is where the discount and number of days is set up for Agility to calculate.

All examples based on the following:
Ireland €1,000 + €230 VAT
England £1,000 + £200 VAT
Settlement Discount is 10%

Default

Ireland:
Pay Suppliers will show an amount to pay of €1,107 and a SD of €123
€100 is posted to the SD Nominal Account and €23 to VAT Nominal Account

England
Pay Suppliers will show an amount to pay of €1,080  and a SD of €120
€100 is posted to the SD Nominal Account and €20 to VAT Nominal Account

SD Excluding VAT

This works when on the Accounting tab "Apply Settlement Disc Excl VAT" is set.

Ireland:
Pay Suppliers will show an amount to pay of €1,130 and a SD of €100
€100 is posted to the SD Nominal Account and nothing to VAT Nominal Account

England
Pay Suppliers will show an amount to pay of €1,100  and a SD of €100
€100 is posted to the SD Nominal Account and nothing to VAT Nominal Account

SD to VAT on Invoice

User will set this if the supplier assumes settlement discount will be taken and calculates the VAT on this basis.
This works when on the Accounting tab the above is set and also "Apply Settlement Disc to VAT on Invoice" is set.


Ireland:
Purchased items Nett €1,000 + VAT €230
When the invoice is posted the VAT is posted at 23% of €1,000
minus SD €100 = €900 
VAT of €900 = €207
Total = €1,000 + VAT of €207
When pay suppliers is displayed the amount to pay = €1,107
SD - €100

NOTE: This option is for invoices from PO ONLY and does not apply to Direct Invoices

England
Purchased items Nett £1,000 + VAT £200
When the invoice is posted the VAT is posted at 20% of £1,000
minus SD £100 = £900 
VAT of £900 = £200
Total = £1,000 + VAT of £200
When pay suppliers is displayed the amount to pay = £1,100
SD - £100

NOTE: This option is for invoices from PO ONLY and does not apply to Direct Invoices


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