Statement Discounts

Used when a customer wants to turn his invoices over to one of his clients for re-imbursement at the retail price, and wants to negotiate a discount price for himself.  Or also known as” End-of-Month Discounts”.  This method works when the Profits Plus standard pre-printed form  (program: FORSTM found in AR/Prepare Monthly Statements) is used.

 

Step 1:

A contract record will need to be set up for the customer – in the Customer Contract Item File, found in Task 21 of the Order Processing module.  The record can be keyed to an item or groups of items using report classes, product codes, or a special category.  The discount will show on the customer's statement and will be treated in AR as a prompt-payment discount or an internal ‘credit memo’.

 

Below is a sample contract record:

*01. Customer #  :        00227                          RIVERTECH INC.       

*02. Alt ship-to#:         00000

*03. Contract Key:       09                

 04. Cust/item#  :

 05. Type ($/%/T):        %

 06. Price / Disc:           10.00

 07. Price level :            N

 08. Exp date  :

 09. Commission %:      0.00

 10. Ref mark    :

 11. Application :        S

 12. Allow EOM   :     N

 

Notes:

• Contract key can be an item #, report class, product code or special category
  • For a specific item number set a “%” off a Price level or a specific “$” amount.
  • If all items this customer purchases are subject to the discount, set up a contract record for each product code and the customer.

• ​Set field 12 of the contract record to N.

 

 

Step 2:

The following Accounts Receivable parameters need to be set.  The parameters can be found in:

• Accounts Receivable (Module 2)
  • System Management Functions (Task 32)
    • Modify Parameter Files (Sub-task 22)
      • Aging & Statement Control (Option 2)
        • STM'DISC'TYPES=    Customer types eligible for statement assigned available discounts.
        • STM'FLG'OPT=( i.e. Y/N/A/a/B/b/C/c/e ) The custom statement flag options.  To get a Statement Discount, the letters A,a,B,b,C,c,D,d,E,e can be used in addition to Y and N.  Y strictly means that the customer gets a normal statement and Nmeans that the customer doesn’t get any statement at all.  Detail can be provided on a separate piece of paper, after the statement has been printed, by using a lower case letter.   For example, a customer could use a C (a statement discount,without detail) or a c (a statement discount with detail).

Customers can be given Statement Discounts based on a Special Category, Product Code, Report Class, Specific Item Number or ‘All of the Above’….which ever is designated in the Contract Record.

A & a = items grouped together in a specified Special Category (field #34 on the Inventory Item Master)

B & b = items belonging to a specified Product Code (field #23 on the Inventory Item Master)

C & c = items belong to a specified Report Class (field #24 on the Inventory Item Master)

D & d = a specific item number

E & e = All of the above   

 

STM'FLG'PROMPT= (i.e. Y/N/A/a/B/b/C/c)  Which ‘prompts’ should appear at the bottom of the screen  at the “Get Statement” field (field #22) on the Customer Master (Task 17 in AR).  These should match the options in STM’FLG’OPT, from above.

 

STM'CIX'DSC= (i.e. A/a/B/b/C/c) Special trigger, other than Y or N, in statement program to prompt for which statements should be printed.

 

STM'CIX'DSC'FMT=(i.e QTY or blank/anything else)   For statement discount supplemental report:

QTY-Show item quantity, gross unit dollar and total, discounted unit dollar and total

Anything else is standard:  Sale total, discount %, discount dollar, and net total dollar (example shown in this document uses: standard)

 

STM'DISC'BREAK=     Dollar break point for special discount (275=$275

 

 

Step 3. (Optional)

If you want the discounts to go to the standard “Discount Allowed” G/L account number, then skip this Step.  If you want the discounts to affect sales tax and sales figures, then follow this Step.  To accomplish this some additional parameters need to set up, go to:

·        Order Processing (Module 6)

·        System Management Functions (Task 32)

o       Modify Parameter Files (Sub-task 22)

§         Posting & Label Options (Option 4)

SET’STM’DISCOUNTS=  Y or N.  This sets the statement discounts as being ‘available’.

Y= If A/R has statements discounts allowed based on O/E Customer Contract Item File (Task 21 in O/E), which was explained in Step 1, then this parameter decides whether the discounts are set during O/E posting as available discounts, which will be available throughout A/R. 

N= IF not, then the discounts will be calculated when the statements are generated and the discounts will be given as Credit Memo’s rather than as prompt-payment discounts

 

STM’CREDIT’TAX=Y or N.  Should the system calculate a tax ‘credit’ on the discount dollar amount?

 

STM’DSC’TAX’PREFIX=21600  The G/L account number for Sales Tax ‘credit’…..can be the normal account number for sales tax.  LEAVE BLANK IF SALES TAX ‘CREDIT’ IS NOT GOING TO BE ACCURRED.  Note: if you have multiple divisions and the ‘credits’ (as well as sales) are by division, then just enter the first 5 digits of the G/L account number. 

 

STM’DSC’EXP’PREFIX=415  The G/L account number for the ‘Discount Expense’ account  (as a Debit) if the discounts are going to be accrued during posting.  Use the first 3 or 5 digits of the G/L number.  If using 3 digits, the remaining 4 digits of the account number would use department and the selling division  i.e. you have G/L numbers of 415-00-01, 415-00-02, 415-10-01, 415-10-02, 415-11-01 and 415-11-02  Enter 415 here and the system will look at the department (middle two digits) and the selling division (last two digits).  Use 41500 and just the last two digits will be added for the selling division.

 

STM’DSC’ALW’PREFIX=11520  The G/L account number for the ‘Discount Allowance’ account (as a Credit) if the discounts are going to be accrued during posting.  See above for determining if 3 or 5 digits should be entered.

 

Note: See the bottom of the document for sample G/L entries based on the above parameter settings.

 

Step 4:

The following field needs to be set in the AR Customer Master File (Task 17) record to indicate if the customer is going to get a statement or not, and if they are, what is the ‘statement discount’ type (i.e. A/a/B/b, etc.)

22. Get statemt.:

• Note: This setting must be Y(es), N(o), or one of the capital letter (no detail) or lower (detail) case letters set up in STM’FLG’OPT .  In order for the statement discounts to work for the individual customer, it cannot be Y or N (Y = standard statement; N=no statement).

 

 

Step 5:

Printing the Statement, go to:

• Accounts Receivable (Module 2)
  • Prepare Monthly Statements (Task 12)
    • Pre-Printed Forms  (program: FORSTM)

 

Make the normal selections, except for:

Please enter - starting customer statement flag type:  If statements are being run for all customers, press the ENTER key for ALL customers, however if statements are going to be printed for just the customers who get, as an example, a statement discount for specified Product Codes with detail, enter ‘b’.

 

Please enter discount cut-off date: this date regulates the cut-off date for the discounts.  Any documents older than this date will not receive the statement discount.

 

After the statement is printed, it will show the available discount at the bottom.  If the setting on field 22 (Get Statement) in the Customer Master file is an upper case ‘B’, no explanatory report will be printed.  If it is a lower case letter ‘b’, an explanatory report will be generated and printed.  Below is a brief sample of the explanatory report:

 

00227              RIVERTECH, INC.                             10/31/xx                                   Page 1                                                                                        ----DISCOUNT----                 NET INVOICE #     ITEM #                      PRICE             %                     $                      TOTAL              65327              150-045                       200.00             10.00              20.00                180.00 65614              210-114*                     250.00               5.00              12.50                237.50 220-714R*                   50.00               20.00             10.00                 40.00 145-110**                   100.00               0.00               00                    100.00

 

Explanation of the sample explanatory report above:  Using the example Contract Record, at the top of this document, Item # 150-045 is in product code 9, and the contract record is set to give a 10% discount, whereas items with the * would belong to another Special Category (A/a); Product Code (B/b) or Report Class (C/c)…this is based on the example where only A/a/B/b/C/c were allowed as valid options…and thereby get a different discount percentage and the item with the ** is an item that didn’t belong to any Special Category, Product Code or Report Class set up with a Customer Contract Record that would receive a Statement Discount.

 

Note:  if the statement or explanatory report doesn’t print the way you need or want for your customers, please contact us for further discussion

 

 

Sample G/L Entries:

When the posting out of the Invoiced Order Holding File (Task 2 in Order Processing) to A/R, the sale goes into Sales Entry & Editing (Task 1 in the A/R module).    The debit side of the transaction is always the A/R account, which comes from the automatic interface in the G/L module (the debit side of a transaction isn’t shown on the sales edit or sales posting.)  The credit side of a sale for may be distributed to many different G/L accounts.  For example a sale is for $107.00---$30 for Large Format – Color, $70 for Supplies.

 

                                                            Debit                Credit

A/R Open 105-00-01                          107.00

Sales Tax  216-00-01                                                    7.00

Large Format Color  400-10-01                                   70.00

Equipment & Supplies  400-11-01                               30.00

 

 

Only if using the above mentioned parameters in 3#4, additional G/L entries will be created.  Re-stating the above example, the customer qualifies for a 10% discount (and the tax and discount are going to be accrued).

                                                            Debit                Credit

A/R Open 105-00-01                          107.00

Sales Discount 415-10-01                      7.00

Sales Discount 415-11-01                      3.00

A/R Discount Allowance 115-20-01                          10.70

Sales Tax 216-00-01                                                     6.30

Large Format Color  400-10-01                                   70.00

Equipment & Supplies  400-11-01                               30.00

 

Ø      The 400-xx-xx Sales accounts are reduced by the 415-xx-xx Sales Discount G/L accounts on the Income Statement.

Ø      The A/R Discount Allowance G/L account is 10% of the sales and tax.

Ø      The Sales tax amount ($7.00)  is reduced by the 10% discount…making it now $6.30

Ø      At month-end, on the A/R Open report (Task 18 in A/R module) the total discount column should equal the total of the A/R Discount Allowance account, which will be included on the Balance Sheet.

 

When the customer pays the invoice for the above example, the customer’s check will be for $96.30, taking a discount of $10.70

• In A/R (Module 2); Cash/Receipts Entry & Editing (Task 2); Enter (ADD) New Cash (Sub-task 2), type in the normal entries for a check receipt
  • Field 6 type in the check amount of $96.30
  • Field 8 type in the discount amount of $10.70
  • On the second screen, the invoice will be displayed with a $107.00 balance
    • When the cursor is under the APPLY-AMT column, press the ENTER key and it will automatically apply $96.30 to the invoice.
    • When the cursor is under DISC column, press the ENTER key and it will automatically apply a $10.70 discount to the invoice.
• The normal procedures should still be followed for Cash Receipts Entry & Editing posting, (print edit list, verify, post, save posting & update daily balancing spreadsheet).

 

 

 G/L Transactions for Cash Receipts Posting

• The G/L transaction for Cash Receipts comes from the automatic interface in the G/L module.  They aren’t displayed on the cash edit or posting.  They will be on the A/R to G/L Interface.

 

    Debit                Credit

 

Cash/Checking 101-00-01                     96.30

A/R Discount Allowance 115-20-01     10.70

A/R Open 105-00-01                                                      107.00

 

 

 

This is an example of how an End of Month Statement discount is calculated.  This example includes how discounts can also be given on sales tax (for the example, 2 Tax Zones will be used).  The customer will get a 10% End-of-the-Month discount on all items.

 

The statement discounts, setup in the Customer Contract Item File (Task 21 in the Order Processing module), are for ­line items, not whole order/invoice discounts.  

 

 

Example:  Invoice #295369 has two line items:  250-4 and 403-6 each with a quantity of 16.  The customer has 2 tax zones, one for 6.1% and the other for 2%.

 

Item  250-4:    Line item each price $1.49       

 

$1.49 x 10% =  $0.15 discount x quantity of 16            =  $2.40 discount on item

 

Line item discount $2.40 x  6.1% Tax Zone                  =  $0.15 discount on tax

Line item discount $2.40 x  2% Zone tax                       =  $0.05 discount on tax

                                                                                       $2.60 total discount for this item

 

 

Item 403-6:       Line item each price $2.75

 

$2.75 x 10% =  $0.28 discount x quantity of 16            =   $4.48 discount on item

 

Line item discount $4.48 x 6.1% Tax Zone                   =   $0.28 discount on tax

Line item discount $4.48 x 2% Tax Zone                      =   $0.09 discount on tax