HOSTED: Please introduce an early payment discount as per the Quickbooks US version.

Sara_7151075

Everybody want this don't they!
Please can we set this up! I know I don't have the time to manually change every invoice that is paid early, and I can bet your bottom dollar, we all want early payments

Unknown

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John Graetz

Kevin.  What Sara is looking for is a means to automatically apply a discount (for early payment) when recording the payment to the customer account.  This feature is not available in Australian editions of Reckon, according to Reckon Help.  The only way that I can think of doing this at present, which could be easier than what Sara is doing at present would be:
1.  Set up an Internal use Bank Account called say Discounts Bank.
2.  When processing the Customer payment, record the actual amount received, going to Undeposited Funds or an actual bank account.
3.  Then process the discount as an amount received, but this time going to the "Discounts Bank".
4.  Periodically clear the Discounts Bank account by transferred the value from what I assume must be a Discounts expense account..
John L G

Shirley Ingle

When GST first came in the ATO required an Adjustment Note raised for discounts. Is that still the case. Quite like John's suggestion. As for the account, depends where you want the Discount to sit in Expense or minus in Income. Of course there is GST to be applied to the discount. So a Journal would need to be raised clearing the dummy Discount Bank Account.

John Graetz

Shirley you are correct.  This becomes a very complicated area and, as such, whilst what I have suggested might be acceptable in principle and if GST was catered for by way of the clearing entry from the "Discounts Bank", it does not conform to what the ATO says in regards to accounting for discounts - as suck, I withdraw my suggestion.  The ATO requires an Adjustment Note to be issued as detailed in GSTR 2013/2.  This ruling also indicates that an Adjustment Note can be incorporated within a Tax Invoice.  The indications are though that at some point in time, usually when the discounted payment has been received (that is, taken up by the customer), that an Adjustment Note must be processed.  There are a number of rules which surround this.  As I said, this is a complicated area and as I am not a registered tax accountant, I am precluded from giving advice.  Sara, I suggest that you read GSTR 2013/2 and discuss this with your own Accountant.  It seems that you have no other option other than to issue an Adjustment Note.
I have seen discounts which apply to early payment for an Electricity account.  This then resulted in the supplier applying an adjustment on the subsequent invoice which appears to have the effect of actually issuing an Adjustment Note.
John L G

Sara_7151075

I don’t currently offer this, I’m not thinking I will bother now!!!! I will continue nagging my late payers to pay. It is far less difficult - especially as I run two businesses simultaneously. I’m in a sticky situation, where by we are plumbers and cannot pre invoice/contract our customers often.... I want to charge for late payments but cannot always do this. In many cases the jobs are urgent or emergency and often the customer is not present. Legally we cannot charge these fees with out first advising the customer and having them agree to our terms. The only time we get this opportunity is if we quote first. Correct me if I’m wrong