Sebastian de GoeijShort answer
How you book a discount depends on the kind. A discount on the invoice itself lowers the invoice amount and VAT and is simply booked with it. An early-payment discount, a credit note or a rebate afterwards needs a separate step, mainly when reconciling, because the amount paid no longer equals the invoice amount.
Key takeaways
- Discount on the invoice: book the net amount; VAT is already calculated on the reduced amount.
- Early-payment discount: the difference between invoice and payment must be explained when reconciling.
- Discounts afterwards usually come as a credit note, linked to the original invoice.
- Always check that subtotal, VAT and total add up after the discount.
- Autoboeker books at line level, checks subtotal, VAT and total, and matches credit notes and deviating payments.
What kinds of discount appear on invoices?
You will roughly see four kinds of discount on purchase invoices. Each needs slightly different handling, so first establish which it is.
- Discount on the invoice: a discount line or lower unit price, already included in the total.
- Early-payment discount: a reduction for paying within a set term.
- Discount afterwards: a credit note for a return, price agreement or complaint.
- Rebate or volume discount: a reimbursement over a period, often as a credit note.
How do you book a discount shown on the invoice?
Book it with the invoice. VAT is already calculated on the amount after discount, so take the net amount and VAT as stated. A separate discount line can go to the same GL account as the costs it belongs to, so costs show net.
With several VAT rates, a general discount must be split across the rates. Check that subtotal, VAT and total add up; a wrongly applied discount is a common reason for a corrected invoice.
How do you process an early-payment discount and a credit note?
With an early-payment discount you book the invoice as is, and the difference arises at payment. The lower payment does not close the invoice on its own, so you book the difference as discount received or given. For the VAT treatment, follow the invoice and the Dutch Tax Administration's rules when in doubt.
A discount afterwards almost always arrives as a credit note. Book it as a negative purchase invoice linked to the original, so the open amount is right. If it is offset against a later payment, invoice, credit note and payment are reconciled together.
- 1Establish the kind of discount.
- 2Book the invoice or credit note with the amounts and VAT as stated on the document.
- 3Check subtotal, VAT and total after the discount.
- 4Reconcile the payment and book any difference as an early-payment discount.
- 5Link credit notes to the original invoice.
How does Autoboeker help with discounted invoices?
Autoboeker books at line level and can split lines or merge lines with the same GL account and VAT code. Subtotal, VAT and total are checked, and payment terms are read or created. Based on the administration's history it proposes GL account and VAT code.
At payment, AI Bank Matching matches invoices to payments, matches credit notes automatically, handles partial payments and flags deviating payments, so a payment that does not equal the invoice amount because of a discount becomes visible.
FAQ
Questions about this topic.
Not necessarily. Book the net amount, or the discount line on the same GL account as the related costs. VAT is already calculated on the reduced amount.
A reduction for paying within an agreed term. The difference between invoice and payment is booked as discount.
As a negative purchase invoice, linked to the original invoice so the open amount is right when reconciling.
Split the discount across the rates and check VAT per rate and the total.
Autoboeker books at line level, checks subtotal, VAT and total, and matches credit notes and deviating payments when reconciling.
