Define Cash Discount Terms
This document explains how to define cash discount terms.
Outcome
Cash discounts are calculated as a deduction from an invoice request that is given at the time of payment and is used to encourage customers to quickly pay a customer invoice.
The cash discount terms are used throughout M3 Business Engine, both on the customer and the supplier side.
Define cash discount terms
Cash discounts are calculated as a deduction from an invoice request that is given at the time of payment and is used to encourage customers to quickly pay a customer invoice.
Cash discounts can be defined up to three different cash discount dates and cash discount percentages.
Parameters to set
Details
This table shows the parameters used in providing the details for cash discount terms:
| Field | Description |
|---|---|
| Cash discount days | The number of days for a valid cash discount. If an invoice is paid within this range, a cash discount is granted. |
| Cash discount as a percentage | Cash discount means that a certain discount from the invoiced amount has been granted if payment is made within a specified number of days, calculated from the invoice date of the invoice. |
| Start day |
The day when the calculation of the cash discount date should start. Start day cannot be used together with a start day interval. The start day can be 01-31 or 99, where 99 indicates the last day of the month. It is important that the start day is specified as 99 if a month free of payment should apply. Example: The invoicing date is January 20, and the start day is 25. The cash discount date calculation starts from January 25. The invoicing date is January 5, and the start day is 99. The cash discount date calculation starts from January 31. |
| Free of payment | The month free of payment is a parameter indicating how many
whole months are to be added when calculating the cash discount date. As month free
of payment is the second parameter when calculating, the calculation starts from the
result of the entry in parameter 1, that is, the starting day. Example: If the invoice date is January 15 and the starting day is 12, this means that the calculation starts from February 12. If the number of months free of payment is 2, the result is April 12. |
| Payment day |
Indicates the calculation of cash discount date. Payment day cannot be used together with a start day interval. Since the payment day is the fourth parameter considered, the calculation starts from the result of the entry in parameter 3, that is, the number of days. Payment day can be 01-31 or 99, where 99 is the last day of the month. Example: The invoice date is January 15, the start day is 12, the number of months free of payment is 2 and the number of days is 10. The calculation then starts from April 22. If the payment day is 25, the result is April 25. |
| Cash discount percentage | The cash discount used as a percentage. Cash discount means that a certain discount from the invoiced amount (cash discount base amount) has been granted if payment is made within a specified number of days, calculated from the accounting date of the invoice. |
| Tolerance days in | The number of days after the last cash discount date for a customer invoice that cash discount will still be granted. The field is used to allow for extra time for payment handling, for instance. |
| Tolerance days out | The number of days after the last cash discount date for a supplier invoice that cash discount can still be deducted from the amount due. The field is used when the supplier allows for extra time for payment handling, for instance. |
| Start day interval |
The start day range rule used to calculate the cash discount date. This type of interval can be based on month/day or day only. If the invoice date is within a certain month/day interval or day interval, the last day in that interval will be used as start day when calculating a due date or a cash discount date. The start day interval rules are defined in 'Start Day Interval. Open' (CMS071) and 'Interval Days. Open' (CMS072). In (CMS071) and (CMS072), the from interval for months or days are set up. Month interval types are in format MMDD (month/day). Day interval types are in format DD (day). Example: Month interval The invoice date is 2022-02-15 (15th of February) and the From month/day intervals are 0101, 0401, 0701, 1001. The due date calculation will use 2022-03-31 (31th of March) as the start day. Example: Day interval The invoice date is 2022-02-15 and the from day intervals are 01, 11, 21. The due date calculation will use 2022-02-20 as the start day. Note: When a start day interval is specified in (CRS077), start day cannot be used.
The start day will then be the end of each interval in (CMS072).
When a start day interval is specified in (CRS077), payment day cannot be used. If a payment day should be used together with an interval, the payment day for payment term and cash discount has to be specified for each interval in (CMS072). |
Simulation
This table shows the parameters used in simulating the dates for cash discount:
| Field | Description |
|---|---|
| Date for simulation |
The date for the simulation of the cash discount dates 1-3. The default value is today’s date, but any date can be specified. This field is used to see what the cash discount dates will be, given all the parameters specified on the cash discount term in (CRS077). By doing this, it is easier to see if the cash discount dates 1-3 are in a chronological order or not. The cash discount dates 1-3 are verified in (CRS077) to check whether the dates are in chronological order. If they are not chronological, an error message is displayed and the dates are calculated with today’s date and are displayed together with the error message. A simulation of the cash discount dates 1-3 can also be done manually by specifying a simulation date and use function key 14-'Simulate' or the simulation button in (CRS077). |
| Cash discount dates 1-3 when simulating | The cash discount dates when simulating. |