Credit discount
A credit discount is an amount applied to Correction (CR) or Return Merchandise (RM) lines or orders to reduce the discount amount of the original invoice. When a credit discount is applied, a new scheduled payment is created for the amount of the original invoice minus the credit amount.
Depending on your selection for the Allow Credit Discounts option in SA Administrator Options-Customers-Cash Receipts, the credit discount can be calculated in different ways.
Based On Amount Paid
You can apply a credit discount based on the actual amount a customer paid on the invoice. Select Based on Amount Paid for the Allow Credit Discounts-Type option in this case. When a return line is created in Sales Order Entry that is tied to a paid invoice, the return line price is set based on the original sales order’s line price. If a discount was applied, the discount percent that was used is used again to calculate the discount amount to deduct, or the “credit discount,” for the quantity that is returned. If you specify an addon when you select the Based On Amount Paid option, the credit discount is posted to the addon. The GL account assigned to the addon is updated with the credit discount amount. It is also shown as a separate line on the customer invoice.
Example:
Original order #12345-00
| Line | Qty | Price | Discount | Net Amount |
|---|---|---|---|---|
| 1 | 5 | 20.00 | 0.00 | 100.00 |
| 2 | 4 | 12.00 | 0.00 | 48.00 |
Invoice Total: 148.00
Terms Discount: 5%
Invoice paid within Terms Discount period: $140.60
A Return Merchandise (RM) order is created for 3 items from line 1. The AO option is set as Based On Amount Paid, with an addon selected.
| Line | Qty | Price | Discount | Net Amount |
|---|---|---|---|---|
| 1 | -3 | 20.00 | 0.00 | -60.00 |
| Addon | 3.00 |
Invoice Total: -57.00
This example shows the RM where no addon is selected for the AO option:
| Line | Qty | Price | Discount | Net Amount |
|---|---|---|---|---|
| 1 | -3 | 20.00 | -3.00 | -57.00 |
Based On Terms
You can apply a credit discount based on the terms of the sales order. This is calculated when the CR or RM order or line is processed in Sales Entry Invoice Processing Report. If you select Based On Terms for the Allow Credit Discounts-Type option, the credit discount is calculated using the terms discount on the order and is posted as a discount on the order header.
Example using order 12345-00 and RM for line 1:
AO option = Based On Terms
| Line | Qty | Price | Discount | Net Amount |
|---|---|---|---|---|
| 1 | -3 | 20.00 | 0.00 | -60.00 |
| Terms discount 5% | 3.00 | 3.00 |
Invoice total: $-57.00
Neither
Select Neither or blank for the Allow Credit Discounts-Type option and no discounts are deducted from the amount on the CR or RM.
Example using order 12345-00 and RM for line 1:
AO option = Neither or blank
| Line | Qty | Price | Discount | Net Amount |
|---|---|---|---|---|
| 1 | -3 | 20.00 | 0.00 | -60.00 |
Invoice total: $-60.00