A/P Quick Payment Discounts

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Issue: We sometimes have supplier invoices subject to quick payment discounts. As these vary between suppliers, and also one supplier may have different rules for different invoice types, we are not sure how to handle them. Any suggestions?

Jul 18th, 2005

Feedback: As you indicate, the problem here is that you are not in control of your supplier's QPD discount regimes, and there is an almost unlimited range of potential implementations. This makes it difficult to build all-encompassing rules into the system to handle them.

The following procedure may get you close though: -

  1. When you receive a suppliers invoice subject to QPD, note the cut-off date and amount of discount, adding this information to a Credit Control Memo when posting. Flag the memo "Waiting Approval" so that it cannot accidentally be paid in full from an Overdue Payments review, and set the Next Action Date a couple of working days before the cut-off date.
  2. Make sure you review Credit Control Memos regularly, and set the Workflow Alert Check "Overdue Credit Control Memos" appropriately.
  3. When you are ready to pay the invoice, review the memo and post a credit for the correct discount value to the suppliers account with an appropriate Document Reference and Comment, selecting a suitable posting G/L account. Remember that QPD is not taxable in some tax regimes (UK VAT included), so if tax was payable on the invoice, make sure you apply the same Tax Regime and Rate on the credit.
  4. Select both the invoice and the credit, and use "Pay Selected". The credit discount will now appear on any remittance you print for the payment, and your Document Reference and Comment will explain the discount applied.

If any other users have alternative procedures in place for this, their input would be welcome.

Paul Wilson - Caliach Consultant