How to set up "credit item"

Emily_9502889
Emily_9502889 Member Posts: 8
edited April 2020 in Accounts Hosted

we have a customer who gets a credit for selling a specific amount of products. I go to add a Credit Adjustment Note but in the first column it asks for an item. How would I set up an item that would reflect this type of credit.  

Comments

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,366 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited September 2019

    Hi Emily

     

    The Items are just a way of connecting to your various Accounts so - depending on how you want this reflected – you can either:

    • link it to the relevant Sales/Income account (which will reduce this account’s running balance)

    or

    • create & link it to a new Income Account with a relevant name (eg “Customer Bonus Discount”) which will reflect as a stand-alone running credit balance in this account.

     

    There are 2 options for how I would process this:

     

    1. Separate Credit/Adj Note

    Setup/use a “Service”-type Item (with “Per Each” UOM) to recognise/calculate the quantity you enter or if you’re not bothered about tracking quantities for this, an “Other Charge”-type Item.

     


    2. Credit on Invoice

    Create a “Discount” Item & add this line onto their applicable Invoice.

    (Remember to use the “Subtotal” Item first if there are multiple lines)

    You can setup various calculating Discounts for percentages or $ values.

     

    Hope that helps.

     

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    Reckon Accredited Professional Partner Bookkeeper / Registered BAS Agent (No: 92314 015)

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    0422 886 003

    shazinoz2@bigpond.com

    www.accounted4bs.com


    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Kwikbooks (Professional Partner)
    Kwikbooks (Professional Partner) Member Posts: 824 ✭✭✭
    edited April 2020
    Hi Emily

    Whichever way you set it up it should not go to income account, it should go to an expense account - Discount Given.  It may warn you when creating c/n or inv. that it usually is an income acct, just go ok and turn off notice.

    discounts can be set up as % as well.
  • Acctd4
    Acctd4 Accredited Partner Posts: 3,366 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited April 2020
    I’m afraid I have to agree to disagree Kwikbooks - A Customer discount should be a reduction in net sales, not an expense, hence the warning in RA. The net result is the same but from an accounting perspective, it should be a sales credit :)

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Kwikbooks (Professional Partner)
    Kwikbooks (Professional Partner) Member Posts: 824 ✭✭✭
    edited August 2019
    Discount given is an expense.
    Discount taken is an income.

    both reasons being you can track what it has cost you to give discounts and maybe stop them or reduce them.  Same with taken you can see how much you have saved by buying quantity or paying on time to get discount.
  • Acctd4
    Acctd4 Accredited Partner Posts: 3,366 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited August 2019
    I think we're on the same page but just have our wires a bit crossed :)

    I absolutely agree you would want to track discounts separately, particularly customer discounts. 
    Maybe not necessarily on the expense side (eg if Officeworks gives you a discount, would you track that in a separate account, record just the amount charged or use a 2nd line still posting to stationery but for the (negative) discount amount ?) but I guess it depends on your particular credit/payment terms.  I agree an early payment or bulk discount would definitely be useful to track in a specific account if it's regular &/or a substantial amount ....

    However ....
    Discount given = Income (reduction)
    If you make a sale of $ 100 & give your customer a 50% discount, that reduces your income from $ 100 to $ 50.

    Discount taken = Expense (reduction)
    If you make a purchase of $ 100 & the Supplier gives you a 50% discount, that reduces your expense by $ 50.

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Kwikbooks (Professional Partner)
    Kwikbooks (Professional Partner) Member Posts: 824 ✭✭✭
    edited August 2019
    Officworks is a little over the top, discounts given/taken is on customers/suppliers/stock. 

    Agree, reducing income & expense has the same outcome but doesn't give the required info to know how much $$ you have saved by paying a supplier early & if cashflow is tight is it worth paying early and leave no cashflow.  Or how much $$ you have given away discounting quantity buy or pay early, to see if your cashflow can support this and at what %.

    In this example it is quantity buy, by putting the discount to expense they can see if the quantity to discount ratio is viable.
  • Emily_9502889
    Emily_9502889 Member Posts: 8
    edited August 2019
    Thank you for your help and quick responses