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Settle a partial vendor payment and the final payment in full before the discount date

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This article walks you through a scenario where partial payments are made for a vendor invoice, and a cash discount is taken.

Fabrikam buys goods from vendor 3064. The vendor gives Fabrikam a cash discount of 1 percent if the invoice is paid in 14 days. Invoices must be paid in 30 days. The vendor also lets Fabrikam take cash discounts on partial payments. The settlement parameters are located on the Accounts payable parameters page. On June 25, April enters an invoice for 1,000.00 for vendor 3064.

Vendor invoice on June 25

On June 25, April enters and posts an invoice for 1,000.00 for vendor 3064. April can view this transaction on the Vendor transactions page.

Voucher Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10010 6/25/2015 10010 1,000.00 -1,000.00 USD

From the Vendors page, April opens the Settle transactions page. April can use the Settle transactions page to view the dates and amounts of cash discounts. The due date is July 25, and a cash discount of -10.00 is available if the invoice is paid by July 9.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Normal Inv-10010 3064 6/25/2015 7/25/2015 10010 1,000.00 USD 990.00

Discount information appears at the bottom of the Settle open transactions page.

   
Cash discount date 7/09/2015
Cash discount amount -10.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take -10.00

April clicks the Cash discount tab to view the discount amount.

Cash discount date Cash discount amount Amount in transaction currency
7/9/2015 10.00 990.00
7/25/2015 0.00 1,000.00

Partial payment on July 1 by using the Settle transactions page

April can create a payment journal for this payment by opening the Payment journal page in Accounts payable. April creates a new journal and enters a line for vendor 3064. April then opens the Settle transactions page to mark the invoice for settlement. April marks the invoice and changes the value in the Amount to settle field to -500.00. The value in the Cash discount amount field is -10.00 for the full invoice, and that the value in the Cash discount amount to take field is -5.05. Therefore, April is settling -505.05 of this invoice.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Selected Normal FTI-10010 4028 6/25/2015 7/25/2015 10010 1,000.00 USD -500.00

Discount information appears at the bottom of the Settle open transactions page.

   
Cash discount date 7/09/2015
Cash discount amount -10.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take -5.05

April wants to settle exactly half the invoice. Therefore, the value in the Amount to settle field is changed to -495.00. The total amount that is settled is now 500.00. This amount includes the -5.00 cash discount.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Selected Normal FTI-10010 4028 6/25/2015 7/25/2015 10010 1,000.00 USD -495.00

Discount information appears at the bottom of the Settle open transactions page.

   
Cash discount date 7/09/2015
Cash discount amount -10.00
Use cash discount Normal
Cash discount taken 0.00
Cash discount amount to take -5.00

April closes the Settle transactions page. A payment line for 495.00 is created in the journal, and April then posts the journal. April can review the vendor transactions on the Vendor transactions pagen and sees that the invoice has a balance of -500.00. April also sees a payment of 495.00 and a cash discount of 5.00.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10010 Invoice 6/25/2015 10010 1,000.00 -500.00 USD
APP-10010 Payment 7/1/2015 495.00 0.00 USD
DISC-10010 Cash discount 7/1/2015 5.00 0.00 USD

Remaining amount paid on July 8

April pays the rest of the invoice for vendor 3064 on July 8, which is in the cash discount period. April creates the payment journal on July 8 and marks the transaction for settlement. April sees that the amount that must be settled is 495.00. The value in the Estimated cash discount field is -5.00, because the 5.00 discount was previously taken.

   
Marked total 495.00
Estimated cash discount -5.00

Information about the marked transaction appears in the grid on the Settle open transactions page.

Mark Use cash discount Voucher Account Date Due date Invoice Amount in transaction currency Currency Amount to settle
Selected Normal FTI-10010 4028 6/25/2015 7/25/2015 10010 1,000.00 USD 495.00

Discount information appears at the bottom of the Settle open transactions page.

   
Cash discount date 7/09/2015
Cash discount amount 10.00
Use cash discount Normal
Cash discount taken 5.00
Cash discount amount to take 5.00

April posts the payment journal and reviews the vendor transactions on the Vendor transactions page. The balance for the invoice is now 0.00, and April sees the two payments and the two cash discounts.

Voucher Transaction type Date Invoice Amount in transaction currency debit Amount in transaction currency credit Balance Currency
Inv-10010 Invoice 6/25/2015 10010 1,000.00 0.00 USD
APP-10010 Payment 7/1/2015 495.00 0.00 USD
DISC-10010 Cash discount 7/1/2015 5.00 0.00 USD
APP-10011 Payment 7/8/2015 495.00 0.00 USD
DISC-10011 Cash discount 7/8/2015 5.00 0.00 USD