Handling cash discounts

Cash discounts/cash rebates are granted to those customers who pay their invoices within a specified deadline in relation to their payment terms. Cash discounts can be set up for Customers and Vendors. They are calculated in connection with the posting of purchase and sales invoices, but are only posted in connection with the posting of the payment if the payment is made before the deadline for the cash discount.

Video about cash register discounts

In this video you can see the necessary setup of cash discounts and how to post with cash discounts: Set up and bookkeeping with cash discounts Setting upcashier discounts There are a few settings to be made in Uniconta in order to use cashier discounts:

• A cash discount payment term must be created
• It must be specified which account the cash discount should be posted to
• The cash discount payment terms must be associated with customers and/or vendors
• If necessary, specify a desired number of grace days in connection with cash discounts

Setting up payment terms with cash discount

Payment terms are set up under General ledger/Maintenance/Terms of payment. Select the Add button to create a new payment term, or select the Edit button to add a cash discount to an existing payment term.

Description of fields

Description of fields for cash discounts on payment terms

Field name	Field Description
Description
Payment terms	The payment term must have a name.
Name	Detailed description of the payment term. This is often the text that appears on invoice layouts etc. E.g. Netto 14 dg. or 5 dg. - 2% if the invoice is due within 14 days, but a 2% cash discount can be used if paid within 5 days.
Default is selected	If default is selected, this payment term is applied to debtors and creditors unless otherwise selected.
Payment method	Select a payment method other than 'cash' to view the fields for setting up cash discounts.
Reminder fee	Check here if a reminder fee should be suggested after e.g. 14 days.
Days
Number of days	Enter the number of days to be added to the invoice date when calculating the due date. I.e. in the example with 'Net 14 dg. or 5 dg. - 2%', one would write 14 in this field.
End of month	The payment date will be the last day of the month.
Partial payment
Settlement discount
Cash discount %	Enter the percentage that can be utilized in cash discount. I.e. in the example with 'Netto 14 dg. or 5 dg. - 2%', one would write 2 in this field.
End month cash discount	For example, if the cash discount date is the current month + 15 days, this field is selected and at the same time 15 is entered in the field Cash discount. Days, which means that the cash discount can be utilized up to and including d. 15th of the month following the invoice date.
Cash discount. Days	Enter how many days you have to utilize the cash discount from the invoice date. I.e. in the example with 'Netto 14 dg. or 5 dg. - 2%', one would write 5 in this field.
Cash discount method	Select whether the cash discount should be calculated on the gross or net amount of the invoice, i.e. on the invoice amount including VAT or excluding VAT.
Reverse VAT on cash discount	If the cash discount is calculated on the invoice amount including VAT, you will often check this box so that a VAT amount is automatically reversed if the cash discount is utilized in connection with the accounting of the payment.

For a description of all the fields under payment terms, please refer to this article: Payment Terms

Setting up account for cash discounts

The general ledger posting for cash discounts is defined on the customer and vendor groups.

• Select Customer/Maintenance/Customer groups
• Select the Edit button
• Fill in the Cash discount field with the account on which you want to post: Cash discounts
• Repeat the above for all your customer groups
• Repeat the above on your vendor groups under Vendor/Maintenance/Vendor groups.

Setup on customers/vendors

For customers who must be able to take advantage of a cash discount, you must select a payment term with a cash discount setup. Therefore, select Customer/Customer and the Edit button on these customers, and fill in the Payment field with a term of payment with cash discount setup. Similarly, you must do on your vendors under Vendor/Vendor.

Grace days

If you want to define that your customers are allowed to use the cash discount even if they pay 2 days later than the cash discount date, i.e. 2 days later than intended, to get the cash discount, you can enter 2 in the Respite days (Cash discount) field under Accounts receivable/Maintenance/Number series. When you post the payment from the customer in a posting journal, the system will automatically post the cash discount if the payment date is before or equal to the cash discount date + the number of grace days.

Post purchase and/or sales invoices

Then post purchase and/or sales invoices. On the individual sales order, quick invoice, purchase order, and purchase invoice, you can select a different payment term than the one selected on the customer/vendor. If a different payment term is chosen, it overrides the choice on the customer/creditor. On purchase orders and purchase invoices, you can also manually enter a cash discount date and a cash discount amount. These two fields will override the payment term setup selected on the vendor.

See calculated cash discount

When purchase and/or sales invoices are posted, the calculated cash discount amount and the cash discount date can subsequently be viewed on the open customer and/or vendor entries. Note! If the cash discounts are calculated on the amount including VAT, the VAT amount of the cash discount will be visible in a field called VAT amount (Cash discount) on the open records. Read more about handling VAT on cash discounts at the bottom of this article.

Creditor payment proposal

When you pay your vendors through the vendor payment feature under Vendors/Reports/Payment proposal, you should be aware of the following fields regarding cash discounts.

Field name	Field Description
Cash discount date	Invoices paid before this date will trigger a cash discount.
Cash discount	Cash discount amount that will be utilized, i.e. deducted from the invoice amount.
Utilized cash discount	If the criteria for cashback is met, i.e. cashback date >= today's date, the cashback amount will be inserted automatically in this column.
Payment amount	The invoice amount minus the utilized cash discount amount

Read more about the vendor payment feature here.

Customer payment with cash discount

When you enter a payment from a customer in a posting journal and settle an open invoice, such as F8 in the posting journal, the amount transferred to the journal will automatically be the invoice amount minus the cash discount amount if the date on the line in the journal is <= the cash discount date on the open customer record that is settled. If a number of days has been entered in the Respite days (Cash discount) field under Accounts receivable/Maintenance/Number series, the cash discount will be deducted if the date on the line in the draft is <= the cash discount date + the grace days. Version-92 Note! If a payment is posted where several invoices and credit notes are offset at the same time, several payment items are created on the customer so that you can see which invoices/credit notes have been paid/offset in the payment and with which cash discounts. The cash discount is also automatically offset when entering an invoice number in the Invoice field in the accounting draft, but ONLY if you have not filled in the account field first. I.e. the best thing is to only enter the invoice number and let Uniconta fill in the account field with the debtor's account number, amount etc. in the draft automatically. Example For example, if you have posted an invoice to a customer for $6,250 with a cash discount amount of $100 and a cash discount date = 1/25/2022, the system will automatically transfer $6,250 to the posting journal in connection with the settlement if the date on the line in the journal is d. 26/1 22 or later. If the date on the line in the draft is d. 25/1 22 or earlier, then the system will only transfer DKK 6,150 to the accounting journal, because the DKK 100 cash discount is automatically deducted. If you simulate the posting in the journal, you can see that it is still the DKK 6,250 that is posted as payment to the customer, but it is only the DKK 6,150 that is posted to the bank, while the DKK 100 is posted to the cash discount account defined on the customer group. Change in the utilisation of the cash rebate The customer does not take advantage of the cash discountIf the customer has not taken advantage of the cash discount, even though they have paid before the cash discount date, then you can simply manually correct the amount in the posting journal. That is, in the example above, where the system would then have transferred DKK 6,150 to the journal in connection with the settlement, then the amount is simply manually corrected to DKK 6,250, then no cash discount is posted. The customer takes advantage of the cash discount even if the payment is after the cash discount date If the customer has taken advantage of the cash discount even though they only pay after the cash discount date, and you want to post the utilization of the cash discount, then one of the following 2 methods can be used:

• In the settlement image that you opened, for example, with F8 from the posting journal, select the Edit button, and then you correct the cash discount date so that the date the customer paid on is <= the cash discount date. After that, you settle the record. The system will then automatically transfer the invoice amount minus the cash discount amount to the journal.

• In the cash drawer, insert the Utilized cash discount field if you don't already have this field. When you settle the invoice, the system will automatically transfer the entire invoice amount to the draft, i.e. in this example 6,250 kr. You must then manually correct the amount in the draft to 6,150 kr. and fill in the Utilized cash discount field with the cash discount amount, i.e. in this example 100.

The customer takes advantage of a different cash discount amount If the customer has deducted a cash discount amount other than the one calculated on the invoice, then one of the following 2 methods can be used:

• For example, in the settlement image that you opened with F8 from the posting journal, select the Edit button, and then you correct the cash discount amount so that the amount matches the discount the customer has deducted. After that, you settle the record. The system will then automatically transfer the invoice amount minus the cash discount amount to the journal.

• In the cash drawer, insert the field Utilized cash discount if you don't already have this field. When you settle the invoice, the system will automatically transfer an amount to the draft, e.g. 6,150 DKK, if it is paid within the cash discount date. However, if the customer has utilized $150 cash discount instead of $100 as expected, then you can manually correct the amount in the journal to $6,100 and at the same time you fill in the Utilized cash discount field with the cash discount amount, i.e. in this example 150.

Payment is posted without equalization If a payment is posted without equalization, there will be a residual amount on the cash discount on the debtor account and there will be open items on both invoice and payment. In order to reset the difference between payment and invoice, the cash discount must be removed manually. This will typically happen on the payment date. If the payment date is within the criteria for the cash discount, the cash discount date must be removed. Otherwise, the cash discount will automatically be applied in the accounting journal and there will be no difference between invoice and payment. To clean up, you need to do the following:

• The cash discount date is removed. This is done under open records (Edit).
• In the cash drawer, insert the Account type field if you don't already have this field. When you equalize the invoice with F8, the system will automatically transfer an amount to the draft. Change the Account type to Discount and use the financial account for the cash discount debtor as a counter account.

VAT on cash discounts

According to Skat, companies that offer their customers cash discounts on the invoice amount including VAT must issue a credit note to the customer if the cash discount is used. Unfortunately, not all companies do this, but the tax authorities have clarified that buyers must still return the VAT on the cash discount. If you want this to be handled automatically in Uniconta, do the following:

1. Create a payment condition with cash discount under Finance/Maintenance/Payment conditions. The cash discount method should be 'Gross amount' and select that the VAT of the cash discount should be reversed, as shown in the example below:
2. Now post your purchase invoices with this payment condition. The calculated cash discount amount will be of the amount incl. VAT and will be visible in the open vendor records. For example, a purchase invoice of DKK 1,000 incl. VAT will have a cash discount of DKK 20 calculated. The VAT on the invoice is DKK 200. Note! The discount is not booked at the same time as the purchase invoice is booked, as the discount is only booked if it is used. Most often, such conditional discounts can only be obtained if you pay the invoice before the normal payment deadline, i.e. the cash discount is only booked when you book the payment.
3. Post the payment of the purchase invoice and settle the invoice. The system will automatically suggest paying the invoice amount excluding the cash/cash discount if the invoice is paid within the deadline for using the discount. When posting the payment, the system will automatically post the cash discount and reverse the VAT as shown in the example below. Note! VAT is only booked on the discount at checkout. payment if this is selected on the payment condition itself before the purchase invoice was posted.