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Enter credit restrictions and payment discounts

Profit can take the creditors' payment conditions into account when entering purchase invoices and making them payable. In order to do so, you have to configure Profit so that credit restrictions, payment discounts or both apply.

Three types of discounts are available at the invoice level:

  • Invoice discount

    Invoice discount is calculated on the entire invoice amount. You can set the invoice discount for each customer.

  • Payment discount

    Payment discount is an invoice discount which companies (sometimes) offer for fast payment. This 'discount' is given on the gross amount so that VAT must in fact be paid on the discount itself. This is typically a percentage in case of payment within a certain period of time.

  • Payment discount using the VAT calculation basis (Belgium)

    In this case, no VAT is calculated on the payment discount. To correctly journalise the VAT calculation basis required for the VAT declaration, you must use an additional ledger account you set up for the integration type.

  • Credit restriction

    Credit restriction is a negative discount to bear the costs of the credit period. If the sales contact pays on time, he can deduct the surcharge. Credit restriction is something different from payment discount. You use credit restriction to make customers pay quickly. This will benefit your cash flow, and at the same time save you time and effort otherwise spent on collecting payments. There is no legal obligation to actually pay the credit restriction, even if payment is made after the due date. Credit restriction is only invoked to limit the costs involved in invoice collections (interest, etc.).

After configuring this, when you enter a purchase invoice, you can specify the data for the credit restriction or the payment discount. Profit takes the credit restriction or payment discount into account when making the invoice payable.

Contents

Enter a credit restriction

In Profit you enter the credit restriction amount directly when you record the purchase invoice, even though you will (probably) not pay it. By doing so, the correct VAT amount is entered.  

In Profit, you do the following to record a purchase invoice for which credit restriction applies:

To enter a credit restriction:

  1. Go to: Financial / Enter / Journal.
  2. Check Financial year and Period. These are the financial year and the period in which you post the entry.
  3. Select the correct purchase journal.
  4. Click on: Finish.
  5. In the first entry line, enter the total invoice amount including the amount of the credit restriction for the creditor in question.
  6. In the second (contra) entry line, enter the total amount of the credit restriction and the corresponding ledger account.
  7. At the end of this entry line, specify the number of days after which the credit restriction amount becomes due.
  8. In the following entry line(s), you specify the cross-entry or entries, after which the VAT amount is automatically calculated in the last line.

    You correct this VAT amount if it deviates from the amount specified on the invoice. Generally, the VAT amount that the supplier specifies on the invoice is entered, unchanged, as VAT on input.

When you later make the invoice payable within the term established, Profit uses this term to signal that no credit restriction amount is due. Profit automatically ensures that the correct amount is made over and re-enters the already entered credit restriction amount in the appropriate ledger account.

Enter a payment discount

You can enter an invoice with payment discount in Financial. By default, Profit calculates the payment discount over the total invoice amount including VAT. You can also specify that you want the payment discount to be calculated over the gross amount by deselecting the Payment discount incl. VAT checkbox in the entry line. You then need to include this field in the entry layout. If you want Profit to calculate the payment discount over the goods total (the gross amount), you deselect this check box. If you want Profit to calculate the payment discount over the invoice total, you select this check box. This check box is selected by default.

When you make the invoice payable later, Profit uses the set term to alert you if the payment discount may be applied. Profit automatically ensures that the correct amount is transferred and enters any payment discount amount in the ledger account reserved for it.

Example:

  • Gross Amount: €1000.00
  • VAT: €210.00
  • Total invoice amount: €1,210.00.
  • Payment discount 2%
  • Payment discount amount including VAT: € 24.20 (2% of € 1,210.00). If the Payment discount incl. VAT checkbox is selected.
  • Payment discount amount excluding VAT: € 20.00 (2% of € 1,000.00). If the Payment discount incl. VAT checkbox is deselected.

To enter a purchase invoice with payment discount including VAT:

In this example you enter a purchase invoice, with payment discount including VAT, over the invoice total.

  1. Go to: Financial / Enter / Journal.
  2. Check Financial year and Period. These are the financial year and the period in which you post the entry.
  3. Select the correct purchase journal.
  4. Click on: Finish.
  5. In the first entry line, enter the total invoice amount, thus without the payment discount, for the creditor in question. Enter the total invoice amount in Amount credit, in this example, €1,210.00.
  6. Select the Payment discount incl. VAT check box if this field is included in the entry layout. This check box is selected by default.
  7. Enter the percentage or the amount of the payment discount specified on the purchase invoice in Payment discount (%) or Payment discount.

    In this example, enter 2% in Payment discount (%). The amount of the payment discount is then automatically completed in Payment discount.

  8. At the end of this entry line, you indicate the number of days within which the payment discount applies.
  9. Complete the cost line and where appropriate, the VAT line, in the usual way.

    You correct this VAT amount if it deviates from the amount specified on the invoice.

  10. Check the data. 

    Fin_Kredietbeperking en betalingskorting (10)

  11. Click on: Finish.

To enter a purchase invoice with payment discount excluding VAT:

In this example you enter the same purchase invoice with payment discount excluding VAT. If you want Profit to calculate the payment discount over the goods total (the gross amount):

  1. Go to: Financial / Enter / Journal.
  2. Check Financial year and Period. These are the financial year and the period in which you post the entry.
  3. Select the correct purchase journal.
  4. Click on: Finish.
  5. Enter the first entry line. Enter the total invoice amount in the credit amount, in this example, €1,210.00.
  6. Deselect the Payment discount incl. VAT check box.
  7. Enter the percentage or the amount of the payment discount specified on the purchase invoice in Payment discount (%) or Payment discount.

    Note:

    The amount of the payment discount is not yet entered. You first need to complete the entry.

  8. Complete the cost line and where appropriate, the VAT line, in the usual way.

    You correct this VAT amount if it deviates from the amount specified on the invoice.

  9. Profit now automatically fills in the correct payment discount amount in Payment discount. In this example €20.00
  10. Check the data.

    Fin_Kredietbeperking en betalingskorting (20)

  11. Click on: Finish.

Also see

Directly to

  1. Purchase entries
  2. Creditor (purchase contact)
  3. Configure VAT
  4. Configure a ledger
  5. Configure journals
  6. Enter a purchase entry
  7. Enter a purchase entry with multiple cost types and VAT rates
  8. Enter a purchase invoice with credit restriction and payment discount
  9. Carry forward purchase invoices and cost entries from Profit Financial to Profit Projects
  10. Enter traffic fines in Profit Financial using an employee wage entry in Profit Payroll
  11. Enter invoices in circulation
  12. Enter a credit note
  13. Block and release purchase invoices
  14. Review purchase invoices in InSite/OutSite
  15. Import an e-invoice and enter it as a purchase invoice

Process

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