Cash Discount functionality in Microsoft Dynamics 365

Setup Automatic Transaction

First we have to setup some automatic transaction for automatic posting.

Go to: “General Ledger – Setup – Posting Setup – Accounts for Automatic Transaction” and setup the Main account for “Customer / Vendor Cash Discount”

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Setup Cash Discount Code

Now we have to setup Cash Discount Code for selection while posting Invoice.

Go to: “Account Payable / Receivable – Setup – Payment Setup – Cash Discount” and setup the cash discount code as shown below:

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This setup shows that if Customer Pay amount or we pay to vendor within one month of Invoice date, He / we will get discount of 5.00% of net amount payable / receivable.

Post AP Invoice with Cash Discount Code

Here I have posted one AP Invoice of INR 5,000.00 with Discount code of “Cash 5%”.

Scenario:

Invoice Journal: INMF-00164

Vendor: Coho Vineyard India

Expense Invoice: AX001

Invoice Amount: INR 5,000.00

Invoice Date: 12-December-2018

Cash Discount Applied: 5.00% if Payment made within 30 Days.

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After this invoice posting following Journal Entry will be reflected in Accounts:

Expense Accounts                           Dr           INR 5,000.00

Accounts Payable Accounts         Cr            INR 5,000.00

 

Post Payment Journal with Cash Discount Code

Here I have posted payment journal for above transaction.

Scenario:

Invoice Journal: INMF-00164

Vendor: Coho Vineyard India

Expense Invoice: AX001

Payment Date: 31-January-2019

Cash Discount Applied: 5.00% as Payment made within 30 Days.

 

While making payment through settlement I have selected above invoice for payment, as shown in screenshot below:

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Here even we have selected invoice with amount INR 5,000.00 it transfer INR 4,750.00 in payment journal after deducting INR 250.00 cash discount.

 

So, after this payment posting following Journal Entry will be reflected in Accounts:

Accounts Payable Accounts         Dr           INR 4,750.00

IND OPER Account                           Cr            INR 4,750.00

 

So there is a difference of INR 250.00 which is posted to accounts automatic as followed:

Accounts Payable Accounts                         Dr           INR 250.00

Vendor Cash Discount Account                  Cr            INR 250.00

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The same process we have to follow for Customer Invoice and Payment.

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