Cash Discounts

SAP Business One
How-To Guide
PUBLIC
How to Define Cash Discounts
Applicable Release:
SAP Business One 8.8
All Countries
English
December 2009

Table of Contents
Introduction..................................................................................................................................... 3
Defining G/L Accounts for Cash Discounts................................................................................. 4
Setting Authorizations ................................................................................................................... 5
Defining a New Cash Discount Name........................................................................................... 5
Defining Cash Discounts by Date.......................................................................................... 7
Defining Cash Discounts by Days after Posting Date ........................................................... 8
Updating and Deleting Cash Discounts.....................................................................................10
Configuring Cash Discounts for Incoming and Outgoing Payments .....................................11
Defining Cash Discounts for the Payment Wizard Run............................................................13
Defining the Minimum Cash Discount .................................................................................13
Changing When Cash Discounts Apply to A/R and A/P Documents ..................................14
Changing When Cash Discounts Apply to Manual BP Internal Reconciliations .................15
Using Net Procedure....................................................................................................................17
Cash Discounts: Localization Features .....................................................................................18
Creating Manual Incoming Payments for A/R Invoices: Belgium, Cyprus, Denmark, Great
Britain, and the Netherlands.......................................................................................18
Defining Cash Discounts that Apply on Sales Tax: Canada and US ..................................18
Database Tables Reference.........................................................................................................18
Copyrights, Trademarks, and Disclaimers ................................................................................19
© SAP AG 2009 2

Introduction
Cash discounts are used to encourage your customers to settle their debts as soon as possible. Your
vendors may also grant cash discounts when you pay your A/P invoices prior to their due dates.
SAP Business One enables you to do the following:
• Define cash discounts in the Payment Terms field linked to your customers and vendors
• Define a hierarchy of cash discounts set according to the payment date
• Apply a cash discount to freight defined in an invoice
• Apply a cash discount to tax amounts included in an invoice
Note
This feature is dependent on your localization. For example:
The cash discount process that automatically applies to VAT is relevant for
Austria, Australia, France, Finland, Norway, Portugal, China, Germany, Panama,
New Zealand, and Spain.
The cash discount process that automatically applies only to the amount before
tax is relevant for Cyprus, Denmark, United Kingdom, Netherlands, and Sweden.
Once a payment takes place, SAP Business One compares the payment date to the due date of the
invoice. If the payment date is earlier than the due date, SAP Business One checks if the payer is
entitled to a discount according to the payment term appearing in the invoice. If a discount is
warranted, SAP Business One updates accordingly the amount to be paid in the payment.
Once the payment is completed, the application creates an appropriate journal entry that also reflects
the cash discount.
Note
The cash discount feature is not relevant for the following localizations: Israel and
Mexico.
© SAP AG 2009 3

Defining G/L Accounts for Cash Discounts
Use the G/L Account Determination window to define default G/L accounts for cash discounts that are
used when transactions involving cash discounts are created in SAP Business One.
Procedure
1. From the SAP Business One Main Menu, choose Administration → Setup → Financials → G/L
Account Determination.
The G/L Account Determination window opens.
2. On the General subtab of the Sales tab, define a sales cash discount account in the Cash
Discount field.
3. On the General subtab of the Purchasing tab, define a purchasing cash discount account in the
Cash Discount field.
To use the net procedure, you have to define an account in the Cash Discount Clearing field.
For information, see Using Net Procedure.
© SAP AG 2009 4

Setting Authorizations
For information about the authorizations required for cash discounts, see the document How to Define
Authorizations in Releases 8.8 in the documentation area of SAP Business One Customer Portal at
http://service.sap.com/smb/sbocustomer/documentation.
Defining a New Cash Discount Name
Use the Payment Terms - Setup and the Cash Discount windows to define the cash discounts and the
methods of applying the discounts.
You can choose whether to link a cash discount template to a payment term. You can replace the
selected cash discount template in the payment term any time, even after the sales and purchasing
invoices are added to the system.
To use the cash discount feature, you must link a cash discount template to a payment term.
Procedure
1. From the SAP Business One Main Menu, choose Administration → Setup → Business Partners
→ Payment Terms.
The Payment Terms – Setup window opens.
2. In the Cash Discount Name dropdown list, select Define New.
Note
If you have already defined cash discounts in your company, after selecting one of them
you can click next to the Cash Discount Name field to open the Cash Discount
window.
© SAP AG 2009 5

© SAP AG 2009 6
The Cash Discount window opens.
4. Specify the following information:
Field/Button Activity/Description
Code Enter a code for the cash discount. This field is mandatory.
Name Enter a name for the cash discount. We recommend entering the name of the
cash discount in this field because it is then displayed in the Cash Discount
Name dropdown list.
By Date Determine the method of applying the cash discount.
To apply the cash discount on a specific day of the month, for example, on the
3rd
, 10th
, 15th,
and so on, select this checkbox. For information see Defining Cash
Discounts by Date.
To apply the cash discount according to the number of days following the posting
date of the invoice, for example, after 10 days, 20 days, and so on, deselect this
checkbox. For information see Defining Cash Discounts by Days after Posting
Date.
Freight Select this checkbox to include freight in the cash discount calculation, if freight
is included in the invoice.
Sales Tax Select to calculate the cash discount also on the sales tax amount calculated in
the invoice.
Note
This field is for the US localization only. For information see
Defining Cash Discounts that Apply on Sales Tax: Canada and US.
5. Add the cash discount.

Defining Cash Discounts by Date
Use the cash discount by date function to apply discounts based on the date of payment.
Procedure
→ Payment Terms.
2. From the Cash Discount Name dropdown list, select Define New.
3. To define day-dependent cash discounts, select the By Date checkbox.
4. Specify the following fields:
Field Activity/Description
Day Enter the day of the month on which to apply the cash discount, for
example: 10th
, 20th
, 31st
.
+Month Enter the number of months after the invoice's posting date on which to
apply the cash discount.
For example, enter 0 to apply the cash discount on the same month as the
invoice's posting date. Enter 1 to apply the discount on the following month.
Discount % Enter the cash discount rate relevant for each day and month after the
invoice's posting date.
© SAP AG 2009 7

Example
In the Cash Discount window there are four different cash discount rates applied according to the day
of payment. The cash discount table is as follows:
# Day +Month Discount %
1 10 0 20%
2 20 0 15%
3 31 0 10%
4 15 1 5%
5 0%
If the invoice posting date is August 1st
, the discounts apply as follows:
Payment Date Cash Discount Rate
August 1 – 10 20%
August 11 – 20 15%
August 21 – 31 10%
September 1 – 15 5%
After September 16 0%
Defining Cash Discounts by Days after Posting Date
Use the cash discount by days after posting date function to apply discounts based on the number of
days following the invoice's posting date.
Procedure
→ Payment Terms.
2. In the Cash Discount Name dropdown list, select Define New.
© SAP AG 2009 8

3. Specify the following fields:
Days After Posting Date Enter the number of days after the invoice's posting date on
which the cash discount applies, for example, 10, 20, 31.
Discount % Enter the cash discount rate relevant for the number of days.
Example
The Cash Discount window displays a table with three different cash discount rates. Each rate applies
to a payment recorded after a certain number of days following the invoice's posting date. The rates
are as follows:
# Days After Posting Date Discount %
1 10 20%
2 20 10%
3 31 5%
4 0%
If the invoice posting date is August 15th
, the cash discount is calculated as follows:
Payment Date Discount %
August 15 – 25 20%
August 26 – September 4 10%
September 5 – 15 5%
After September 16 0%
© SAP AG 2009 9

Updating and Deleting Cash Discounts
You can change and update cash discounts and the methods of applying the discounts at any time,
even after adding sales and purchasing invoices to the system.
You can choose whether to link a cash discount template to a payment term or not. You can replace
the selected cash discount template in the payment term and update the cash discount rates.
Note
Modifying the Payment Terms – Setup window and the Cash Discount window
updates all open documents that utilize those terms.
Deletion of cash discounts is possible if the cash discount is not linked to other
payment terms or documents.
Procedure
→ Payment Terms.
2. To update the cash discount, click next to the Cash Discount Name field.
3. In the Cash Discount window, make your changes. To delete the cash discount, right-click the
window and choose Remove. Alternatively, from the Data menu, choose Remove.
4. Choose the Update button.
© SAP AG 2009 10

Configuring Cash Discounts for Incoming
and Outgoing Payments
When you create a payment for an open A/R invoice, SAP Business One calculates cash discounts
according to the payment terms of the invoice and the number of days between the invoice posting
date and the payment posting date.
Note
The following procedure describes the use of cash discounts for incoming
payments. Using cash discounts for outgoing payments is similar.
The same behavior applies when you create incoming payments for A/R reserve
invoices and A/R down payment invoices.
Procedure
1. From the SAP Business One Main Menu, choose Banking → Incoming Payments → Incoming
Payments.
The Incoming Payments window opens.
© SAP AG 2009 11

2. In the Code field, specify the customer code and press TAB.
SAP Business One does the following:
Displays all the open invoices for the selected customer.
Calculates the cash discount when you record a payment from your customer
Note
If you record a payment after the invoice due date has passed, the application does not
calculate any cash discount.
3. The following fields are related to the cash discount. You can view and change the discount
manually:
Cash Discount % Displays the cash discount rate calculated according to:
• Invoice posting date
• Payment posting date
• Cash discount linked to the payment terms specified in the invoice
Total Discount Displays the total discount amount calculated according to the Cash
Discount %.
Note
To display this field, choose (Form Settings) in the
toolbar.
Note
The customer is credited for the original full amount of the A/R invoice. The cash
discount applies to VAT as well. In case of partial payment, the customer is credited for
the respective amount of the original amount of the invoice and not for the amount
actually paid.
© SAP AG 2009 12

Defining Cash Discounts for the Payment
Wizard Run
The following cash discount settings apply only when you are running the payment wizard.
Defining the Minimum Cash Discount
Use the Min. Cash Discount % (A/P) field to define the minimum cash discount percentage to be
considered by the payment wizard during the payment run. If the cash discount percentage defined in
the payment term of the document is lower than the percentage defined in this field, the wizard ignores
the following documents:
• A/P invoices
• A/P reserve invoices
• A/P credit memos
• A/P down payment invoices
• A/P down payment requests
Procedure
1. From the SAP Business One Main Menu, choose Administration → Setup → Banking →
Payment Run Defaults.
The Payment Run Defaults – Setup window opens.
2. In the Min. Cash Discount % (A/P) field, specify the minimum cash discount to be considered by
the payment wizard.
3. Choose the Update button.
© SAP AG 2009 13

Changing When Cash Discounts Apply to A/R and A/P
Documents
You can decide to give the highest discount for a specific document, even when the date of the
payment run deviates from the conditions defined in the cash discount template.
Note
This function is relevant only for A/R or A/P documents that create accounting
transactions.
Procedure
1. From the SAP Business One Main Menu, choose Sales – A/R or Purchasing – A/P and choose
a document that creates accounting transactions.
2. Specify the required data, and on the Accounting tab, select the Max. Cash Discount checkbox.
3. Add the document.
Note
You cannot change the status of the checkbox after adding the document.
© SAP AG 2009 14

Changing When Cash Discounts Apply to Manual BP Internal
Reconciliations
Use the Internal Reconciliation function to reconcile internally transactions posted to business
partners.
Use the Internal Reconciliation window to define and change cash discounts against A/R or A/P
invoices, credit memos, and down payments.
Prerequisites
1. You have created an A/R or an A/P invoice, credit memo, or down payment.
2. You have created a payment that is not based on an invoice.
Procedure
...
1. From the SAP Business One Main Menu, choose Business Partners → Internal Reconciliations
→ Reconciliations.
2. In the BP Internal Reconciliation – Selection Criteria window, select the Manual radio button and
a business partner.
3. Choose the Reconcile button.
Note
You cannot use cash discounts for multiple business partners or for automatic and
semiautomatic internal reconciliations.
The Internal Reconciliation window opens.
4. To select one or more open invoices, double-click the invoice row or select its checkbox in the
Selected column.
5. Select one of the payments using the same method. Once you have selected the payment, the
application calculates the cash discount value by default and updates it in the Cash Discount
Amount field for each invoice. SAP Business One calculates the cash discount according to the
business partner’s payment terms and with reference to the posting date of the payment
selected for reconciliation.
© SAP AG 2009 15

Note
By default, the Cash Discount Amount field is not visible. After you select a
payment, if the calculated cash discount is not zero, the Cash Discount Amount
field automatically appears. To display this field manually, choose (Form
Settings) in the toolbar.
SAP Business One cannot calculate the cash discount for more than one
payment. Therefore, if you select more than one payment, the cash discount is set
to zero. You can change it manually.
The cash discount calculated by default is based on the value appearing in the Amount to
Reconcile field. You can change the value in the Cash Discount Amount field. For information
about manually adjusted cash discount calculations, see the example below.
SAP Business One cannot calculate the cash discount for more than one payment. Therefore, if you select more than one payment, the cash discount is set to zero. You can change it manually.
6. To complete the reconciliation, choose the Reconcile button. The reconciliation can be
completed only if the total value in the Amount to Reconcile column is zero.
The cash discount value total is posted on reconciliation as part of the internal reconciliation
journal.
Example
• You selected an invoice balance due of 100 and a payment of 63.
• There is a 10% cash discount associated with the invoice.
• If you manually adjusted the value in the Amount to Reconcile field to 70, on selection of a
payment the following fields in the invoice row are updated with the values:
Cash Discount Amount: 7
Amount to Reconcile: 63
• After the selection of a payment, you manually adjusted the Amount to Reconcile field in the
invoice row to 63. The cash discount amount is calculated as follows: (63 / (100 – 10)% x
100%) - 63 = 7.
© SAP AG 2009 16

Using Net Procedure
The Net Procedure function lets you decide if you want to recognize a cash discount when you add an
A/P invoice to the system or when an actual payment for the invoice is made. The journal entry
created by the A/P invoice reflects this recognition. However, if no cash discount is linked to the A/P
invoice when the invoice is added, the A/P invoice creates a regular journal entry, even when the Net
Procedure checkbox is selected.
Note
The Net Procedure feature is relevant for the following localizations: Austria, Australia-
New Zealand, Finland, France, Germany, Spain, and Switzerland.
Prerequisites
• You have defined a cash discount clearing G/L account. For information, see Defining G/L
Accounts for Cash Discounts.
Procedure
1. From the SAP Business One Main Menu, choose Purchasing - A/P → A/P Invoice.
2. Specify the necessary information for the invoice.
3. On the Accounting tab, select the Net Procedure checkbox.
4. Add the A/P invoice.
When you create an A/P invoice with a cash discount template and the Net Procedure checkbox
is selected, the cash discount is recognized by the time the A/P invoice is added. As with any
other invoice, the cash discount is based on the payment terms and the cash discount defined
for the business partner.
© SAP AG 2009 17

Cash Discounts: Localization Features
Creating Manual Incoming Payments for A/R Invoices:
Belgium, Cyprus, Denmark, Great Britain, and the Netherlands
The following notes are relevant when creating manual incoming payments for A/R invoices, A/R
reserve invoices, or A/R down payment invoices:
• The cash discount applies only to the net amount and does not include the VAT.
• If the cash discount applies to freight, and there is freight with VAT in the A/R invoice, the cash
discount should apply to the freight net amount, without any change in the VAT amount applied
to the freight.
• The same behavior applies to purchasing documents, as well as to incoming payments for
vendors and outgoing payments for customers that you create.
The cash discount applies only to the net amount and does not include the VAT.
If the cash discount applies to freight, and there is freight with VAT in the A/R invoice, the cash discount should apply to the freight net amount, without any change in the VAT amount applied to the freight.
The same behavior applies to purchasing documents, as well as to incoming payments for vendors and outgoing payments for customers that you create.
Defining Cash Discounts that Apply on Sales Tax: Canada and
US
When defining a cash discount in the Cash Discount window, use the Sales Tax checkbox to apply the
cash discount on sales tax. If the checkbox is deselected, the cash discount is applied only to the
amount before tax, and the sales tax is not discounted. You can change the status of the checkbox at
any time.
Note
The same behavior applies to outgoing payments that are created for A/P invoices.
Database Tables Reference
For information about the tables used in cash discounts, see the document Database Tables
Reference in the SDK Help Center for 8.8 in SAP Community Network. To access the SAP Business
One developers’ area of SAP Community Network, go to
https://www.sdn.sap.com/irj/sdn/businessone.
© SAP AG 2009 18

Copyrights, Trademarks, and Disclaimers
© Copyright 2009 SAP AG. All rights reserved.
The current version of the copyrights, trademarks, and disclaimers at
http://service.sap.com/smb/sbocustomer/documentation is valid for this document.
© SAP AG 2009 19

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