Discount Uses Cases and Calculations

Overview

This article contains information on the Ignore for Sales Tax, Calculate and Display on Invoice, Sent to Accounts Receivable, and Priority settings for configuring discounts and how they may apply in real world scenarios.

The following examples are to illustrate how the Discount Calculation fields can be applied and may not reflect your specific business needs or practices.

Use-Cases and Calculations

Standard Discount

Standard discounts are typically a percentage of a billable amount negotiated between your firm and your client:

  • Ignore for Sales Tax = No
  • Calculate and Display on Invoice = Yes
  • Sent to Accounts Receivable = Yes

Rebates

Rebates are like a retroactive discount. For example, you want to offer a $100k rebate after $1M in spending from your client. However, you don't want this to show on the invoice, but you do want to track the account for the future rebate in your reporting:

  • Ignore for Sales Tax = Yes
  • Calculate and Display on Invoice = No
  • Sent to Accounts Receivable = No

VMS Fees

A VMS / MSP will charge a fee (often 2-3%) on any amount billed. Your firm's GM reporting and GL accounts need to reflect the billable amount minus that fee.

  • Ignore for Sales Tax = Yes / No; varies on VMS / MSP.
  • Calculate and Display on Invoice = Yes / No; varies on VMS / MSP.
  • Sent to Accounts Receivable = Yes

Priority Calculation

When using multiple discount rates, you can set the order in which the discount should apply:

  • If two discount rates have the same priority, they will be calculated based off the same transaction amount.
    Example:
    • Discount #1 with Priority 1 = 10%
    • Discount #2 with Priority 1 = 2.5%
    • Transaction Amount = $100.00
    • Discount #1 is 10% of $100.00 = $10.00 discount
    • Discount #2 is 2.5% of $100.00 = $2.50 discount.

    Total Discount = $12.50

  • If two discount rates have different priorities, then the discount amount will be calculated based on transactions with discounts already applied.
    Example:
    • Discount #1 with Priority 1 = 10%
    • Discount #2 with Priority 1 = 2.5%
    • Transaction Amount = $100.00
    • Discount #1 is 10% of $100.00 = $10.00 discount
    • Discount #2 is 2.5% of $90.00 = $2.25 discount

    Total Discount = $12.25

  • Adding a New Discount Rate Version
  • Viewing Calculated Taxes, Discounts, and Surcharges on Invoices