Scenario: Posting a purchase invoice from a supplier say for £1000, the supplier also offers 2% payment discount if the payment is made within 8 days, the actual supplier invoice assume the lower VAT amount.
Note: VAT legislation in the UK states to always assume the lower vat amount i.e. £171.50 (even if you do not take the payment discount)
Without Discount
|
With Discount
| |
Amount
|
£ 1000.00
|
£ 980.00
|
VAT Amount
|
£ 171.50
|
£ 171.50
|
Total Amount
|
£ 1,171.50
|
£ 1,151.50
|
Following three steps involved in setting up NAV to accommodate above scenario.
1) General Ledger Setup
2) Payment Terms Setup
3) Customer Card Setup or Payment Discount % in Invoice Page.
General Ledger Setup
![clip_image002[16]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEQSIKXbexPbOH1gYVv54lUHEoMrJkpIXT3kjqtsyG3AjWRiuWxyCDNZUPs5qa4ZF90c6ILtI-zqkL3PZJ70yL8gzaxds_I3KvfrUTmubgrbhX1_fN2yJUfQeKJjnTAEp3E1xHEbxo85Ts/s1600-h/clip_image002%25255B16%25255D%25255B2%25255D.png "clip_image002[16]")
Pmt. Disc. Excl. VAT: Place a check mark in this check box; so that the payment discount is calculated on amounts excluding VAT.
VAT Tolerance %: The value in this field needs to be at least as high as the maximum settlement discount % you will be offered (purchase order processing) and offering (sales order processing).
Payment Terms Setup
![clip_image004[16]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSB0WLxkdanYMTXnmcTOu3sTJR638MECxfHjBU6zdZCiDOf4ABJBtYZSzTbgVBBkD0yImcOEc-JEH5p0kUY61cMCa-RhS9pDsEkM5xw-M9g0Cb12Tg-sYCZilrpfGH423vAOantS3RlmKr/s1600-h/clip_image004%25255B16%25255D%25255B2%25255D.png "clip_image004[16]")
Discount Date Calculation: If you enter a date formula here, the program will automatically calculate a payment discount date when an invoice is created. The date indicates the deadline for receiving a payment discount.
Discount %: Here you can enter the percentage of the invoice amount. The program will automatically calculate a possible payment discount when you post an invoice. If payment occurs on or before the payment discount date, the program will apply the payment discount when you post the payment of the invoice.
Customer Card Setup or Payment Discount % in Invoice Page.
![clip_image006[16]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjR_M8Gc7K6aPHsR-D8lracmDDwhIjtcd_zZYmP5yJ9rU9sdvA7uUiopmVrkZfDYigoPdPOUVgCHp6MUvxFh2Nkb4eaAgWVMA0huFXB5Fh8xESrAlkBfKgmar8IGnG8RZjP2i-BqxxdjFL5/s1600-h/clip_image006%25255B16%25255D%25255B2%25255D.png "clip_image006[16]")
You could select a payment terms code with Discount % against the vendor card. The program will automatically calculate a possible payment discount when you post an invoice.
![clip_image008[10]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXGGrTYlF1IsFoAV6mgsetf2rqPFhA8OdKfoin8jKKCeTcrrrF8r2ZJSusL5Mdmb7LfARa8B8kWODxbj2KwbkYYLkmDe9Ufk204NFbWQjsa6paHiq-wevniLy35NGyvRySo8CEeaJyTIVy/s1600-h/clip_image008%25255B10%25255D%25255B2%25255D.png "clip_image008[10]")
You could also manually enter Payment Discount % in the purchase invoice without being predefined under Payment Terms Setup.
Example: Below screenshots illustrates above scenario with the relevant settings in place.
· Purchase Invoice
![clip_image010[16]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhoQuu0pXEObwSe0hVm40XRZt9LQ3gSTZCwAsP6X0pDD2twdr_uobp6PcHr1-qkDYT7OluWYB4xpGbsK9-Aw89f5ZSBmKl9_6d91uoI3exM5oomSeG6SRacu9bN2IDehcFVJvJYz8I53sYF/s1600-h/clip_image010%25255B16%25255D%25255B17%25255D.png "clip_image010[16]")
· Statistics
![clip_image012[16]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwSE9uN-IzwwTr3oi2d-FKNvQNMZPi7UKPYYeK_BMVRCN92V37qlWyeSYJhyphenhyphenBhkFiHVY44v2yQazEHnJYzm_lPOotTTBP1jj3fC1tFQ9SJwO3OsoNcdpUFeNlJGDJkqSEXqkWEUDXe_Cz0/s1600-h/clip_image012%25255B16%25255D%25255B2%25255D.png "clip_image012[16]")
· Posted the purchase invoice.
· Document Date: 27/01/2011 | Pmt. Discount Date: 04/02/2011; in line with payment terms.
· Payment is made on 07/02/2011 (Outside discount tolerance)
![clip_image014[10]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMNiGyqwZ-j9WTHsOOgeEevYGlrjy45xBe90hsi6NI-SZ1A-oMF3fQ9upmiiG0aDKZH3zCfNReKdAL2-6cyNZQPUqtf7Yvhyphenhyphen3Mjc0emA09kaVao5OnJ77U1D1Qo0uO8EtmbOkeoaFZzwPP/s1600-h/clip_image014%25255B10%25255D%25255B10%25255D.png "clip_image014[10]")
· Posted payment journal.
· Vendor Ledger Entries
![clip_image016[16]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSs6jtH2dRGu3WCm26mODfS-gmkoadS-DxoB2nzQiPVfocCdRjgNiSPQEuRBSItsZzpa8hwH5PwqZZFjtDWW8JE1pSTvYL3nxm8I46pYglxtR7PYwlfEqEgngO2oDDX6H_3TJBM1cRLdrm/s1600-h/clip_image016%25255B16%25255D%25255B10%25255D.png "clip_image016[16]")
As you could see from above, with the right settings in place, NAV does consider lower VAT amount automatically.
