I just found out that one of my suppliers offers a 2% discount for early payment. I have already created the purchase invoice for the full amount and I’m wondering how to properly account for the 2% discount when I enter the payment. If I use the deductions or table than do I need to create an account to put the 2% discount?
One of the possible methods is to cancel the invoice and Amend it to rectify and add the discount percentage.
Or, if you need to keep the invoice and do the payment with discounted amount and at the same time closing the invoice (I mean making it paid) is the following:
Create Payment Entry, at Paid Amount field put the amount that you need to pay (discounted by this 2%), but at the table of the invoice details, put the allocated amount to be the completed amount (the outstanding amount), then you will notice that automatically the difference amount is calculated and you can click on write it off to add it for the discount table. All of this in the Payment Entry doctype.
Thank you for the great information Bilal. My only problem now is that I get the error “Please set default Write Off Account in Company” when I hit the “write off difference amount button”. However I cant seem to figure out how to setup the default write off account. Also it seems there was no write off account created when I set the German chart of accounts. What would be the best practice for this?
From Company, can set your default accounts.
From an accounting point of view would I use the same write off account for both payments to suppliers and payments from customers? My previous accounting system was less sophisticated and I never had a write off account.
It could be by reserving if debit or credit for the write off account depending if the party type is customer or supplier. Please give a try and check if it automatically will decide the credit and debit for the write off depending on the party type, otherwise you need to take care for this manually. Or, it will be required to add custom script t handle this automatically if already ERPNext is not doing it.
Please let us know the result of the try.