Can anyone help - question as is is on the time - How do I key a sales discount in Sage? NB Invoices are imported at full value. Using cash accounting so discount is only keyed at time of payment receipt when we know how much has been received. Has been done. Shows on audit trail as 'SD' type transaction - just no idea how to key it!!
-- Edited by Cheshire on Friday 9th of May 2014 12:52:31 PM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
when I do discounts I go into bank, customers and then at the far right of the screen it says discount- I key the amount taken in there- is that what you mean?
Oh Sharon
You have saved my Firday. Im being a right old plonker this week - I didnt even see that heading!!! Ive never done discounts before so can you help me with this....
Invoices are imported at full value (T1) eg £100 plus VAT £20. When payments are received for the lower amount eg £108 the VAT will need to be adjusted down to £18 as the customer is on VAT cash accounting. BUT there is only the receipt box and then the discount box to be filled in - ie no way I can change the VAT. Do you now how I would do his in sage?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Jo, just to be clear on what you are asking, is it that the sale price is £100 plus vat, i.e. £120 in total but 10% early payment discount is being offered (£90 plus £18 vat = £108)? If so, why not enter a credit note for £10 plus vat to clear the account and code the £10 to cash discounts? Not sure if this is the correct way of going about it but seems to tidy the ledger up.
Shouldn't the VAT be charged on the amount net of settlement discount, or has this changed since I last did any work? eg Invoice for £100 net plus £18 VAT (£90 @ 20%), total £118. That then gives the correct VAT figures for cash accounting.
That's if it is a settlement discount. The OP referred to it as a "sales" discount, suggesting it's some kind of trade discount that hadn't been agreed at the time of the sale, in which case it would be £100 plus £20 VAT, and a credit note for the discount (£10 + £2 VAT) would be needed. That would also produce the right VAT figure for cash accounting.
How come the invoices are not be raised with the lower Vat chargeable in the first place ? I was always taught that the Vat is applied to the discounted amount so therefore lesser Vat charged regardless of whether they choose to take the discount or not (assuming it is early settlement discount not just a regular discount)
-- Edited by Sharon Eyre on Friday 9th of May 2014 04:14:13 PM
Sharon, I think Jo has taken over from another bookkeeper who has been doing it wrong. If the former bookkeeper showed £20 VAT on the invoice, then her customer has probably claimed the £20 VAT, and so I am not sure Jo should correct it.. unless she issues a credit note and a new correct sales invoice to each customer - which if they have already paid, would mean refunds = messing! If Jo's client has collected £20, then prob best to just pay over the £20 and issue correct invoice from now on, which would, in future, show £18.
Ive just taken on a new client - the previous bookkeeper has keyed some discounts on sales of services and when I tried to look into what was happening I found out the following - There is no mention of discount on the invoices my client sends out for early settlement (or for anything else) but one or two of their customers have signed a (semi-industry wide) agreement to pay fees at a set rate, if they pay up within 3months. So invoices are sent out at the full rate of £395 + VAT £79 on the basis that most payments would be made in excess of 3months and so the full £474 would be received. BUT with a small number some will be settled within 3months so they will just remit £240 (ie £200+VAT £40)
Ive been told that my client has verbally agreed (need to find out if this is in writing - waiting for call back) he will accept these lower payments/abide by this industry scheme - with just one of his customers.
In sage - invoices are imported at full value. Previous bookkeeper has then allocated receipts to customers account as they hit the Bank and made an adjustment as a Sales Discount. BUT Ive noticed that the VAT on the sage screen is still at the higher level of £79, because the full invoice of £474 has been inputted.
So Im not sure what I should do to put this right/what to suggest to the client. From what Im reading (1) Get them to invoice for £395 net & VAT £40 (ie 200 @20%)? Although - how would they stand if no discount was documented in the invoice? (2) if I understand this correctly they have overpaid on their VAT?
Or is it the view (as mine was initially) that they should issue credit notes for the lower payments received given nothing is documented?
-- Edited by Cheshire on Friday 9th of May 2014 04:52:42 PM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Jo, technically if your client has received the full VAT from his client, you have to pay this to the VAT man. Your client shouldn't be out of pocket, and presumably neither will the solicitor as they will have claimed the higher VAT... but its best to ask that question. If the solicitor has only claimed £40, might be better to credit note and recharge?? As long as you declare what the solicitor claimed, you should be ok with the rest!
That's how it seems to me, but happy to be corrected
Sounds like you are having a right pickle, hunnie!
-- Edited by FoxAccountancyServices on Friday 9th of May 2014 04:44:28 PM
Hi Michelle
sorry just edited my post as I misled by using the word sales receipt when I meant VAT screen on sage. They just received remittance advices with an amount and invoice number on, then they trawled back to see if the invoice was paid within three months and paid £240 to invoice which cos its on cash accounting (an they keyed the invoice in at £474!!) meant that £79 went to VAT £161 went to the net part and a settlement discount of £234 was keyed!! I seriously began to doubt myself and Ive such a headache from looking at the figures. Sorry for confusing matters more. Yes a right old pickle this one on a few levels. No petty cash done for 7 months. Payments made on behalf of a related company to Director's loan - have they never heard of Inter-company positions??!! Payments to a VAT savings account to Directors loan - its getting scary mary the more I dig! Maybe I should stop digging. I love a challenge!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I think I would be tempted to do a credit for the difference - just on a paper trail- dont suppose the customer is too bothered about seeing this as I assume he just thinks he is receiving his discount.
I have a client who receives a settlement discount but the company still charge the full Vat on the invoice so I just reclaim exactly the same amount.
Sounds like you will need a BIG GIN and a girlie shoulder to moan on.. Im here when youre ready xx
Thank you Michelle. Would say I will round in about 20 minutes but I have to stay sober and got to do some work today and then collect my son from work at around midnight! Reckon we have to meet up soon though! I promise!!!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I don't think I'd treat anything that big as a settlement discount. A few percent off for prompt payment is normal, but that's ridiculous. I'd have thought an auditor or tax inspector would think so too. I think I'd raise a credit note for the difference, and reduce sales. It overstates both turnover and overheads.
