Applying a Discount
You have several options for applying a Discount to items in a sales or buying transaction in the new version of the system. Discounts can be applied on a per-item basis or on the whole transaction, as per your business need. These facilities are available in all Sales and Purchase transactions (e.g., Sales Order, Sales Invoice, Purchase Order, Purchase Invoice, etc.).
1. Discount on Price List Rate of an Item
In each item row of a transaction, you can give a direct discount over the Price List Rate of the concerned item.
- Look for the Item Table in the transaction form.
- Click on the downward arrow at the right-hand side of an item row to open further item details.
- In the Discount section, you can input a discount either:
- As a percentage (%), or
- As a fixed amount (same as the transaction currency).
When a discount is entered in this way, the system will automatically recalculate the Rate, Amount, and Net Amount fields for the item. The discount will be displayed in the item's price summary and total transaction figures.
This functionality is especially handy where discounts are different for each item or where promotional discounts are at the product level.
Note: The Discount (%) field is in all Sales and Purchase transaction types by default.
When you have a standard percentage-based discount which is applied to specific quantities of items, specific groups of customers, or special situations, then it is recommended that you use a Pricing Rule. A Pricing Rule allows the automatic management of discounts based on the details of the required specific criteria, such as quantity, type of customer, category of product or service, or time.
2. Discount on Net Total or Grand Total
Besides item-level discounting, you can also impose an overall discount on the overall amount of the transaction. This is handled using the Additional Discount section found in documents like Sales Order and Sales Invoice (or their purchase counterparts).
You can choose to apply the discount as either a percentage (%) or a fixed amount (value). The system provides flexibility to apply this discount on either the Net Total (sum of all item values before tax) or the Grand Total (final total after taxes and charges).
2.1 Discount on “Net Total”
When a discount is posted on the Net Total, the discount is apportioned proportionally across all items within the transaction.
- The Net Rate and Net Amount fields for each item are automatically updated to show the applied discount.
- These updated Net values now form the new basis for tax calculation and any additional charges.
- Net Rate and Net Amount columns will be made available in the items table after applying this kind of discount.
This is used when the discount only applies to the item price and should not largely affect tax calculation.
Example:
In case the Net Total of items is 10,000 and 10% discount is charged, Net Total will be 9,000. The tax is calculated as a result on the netted 9,000.
2.2 Discount on "Grand Total"
If a discount is charged against the Grand Total, the system adjusts item values and taxes proportionally.
- The Net Rate, Net Amount, and taxes all get updated based on the discount amount.
- This makes sure that the discount impacts the final payable or receivable figure along with the relevant taxes.
- The adjustment automatically gets updated in the ledger postings created from the transaction.
Example:
If Grand Total (taxes inclusive) is 10,000 and a discount of 10% is given, the amount payable finally is 9,000. The discount is apportioned on item and tax components proportionately.