[18.3.8] Added “Early Payment Discounts" to sales invoices

I’m not convinced anyone would need this to be honest. It looks like early payment discounts on tax-inclusive amounts are permissive everywhere. And this should be preferred way.

Of course you can already do this in Manager but it’s a manual process. The idea was to automate it so users actually take advantage of it. Nobody will go out of their way to offer early payment discounts and then laboriously trying to keep an eye on who is eligible and then manually creating correct entries. But if system can generate these entries for you based on the rules you set, then a lot of businesses might start using the system.

Not to mention, current implementation is a bit lame. In future, your invoices can automatically say “pay this much if paid before XYZ or that much if paid after XYZ” without any work by the business issuing the invoice.

for us Indian users that would be the only way because the law requires to issue credit notes.

no. the guide shows only a single tax code in the transaction as an example.

what i meant was, the initial invoice would have items with tax rates 12%, 18% and 28%. so when issuing the credit note as a discount, all these same tax codes have to be applied. this would be a hassle because the ratio has to be manually calculated as to how much discount should be applied for each tax code.

for example, in the initial invoice the 12% rate would have had the largest share of the invoice and if the credit note is issued with the largest share of discount allocated to 28% tax rate, this would be more or less similar to evading tax.

the more i think about it, the deeper is the rabbit hole.

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That’s how it should be implement. But if “early payment discount” rule is set on invoice, then Manager can generate correct credit note for you automatically. I wouldn’t ask anyone to do this manually because nobody would bother.

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glad i could make my point clear.

The Guide explains what to do if multiple tax codes are used. The example illustrates a single tax code because that is the most common situation.

I agree!

As I see it, you are already asking the user to do things manually, just not the calculation. As currently implemented, every time you take in a receipt, you must go to the Sales Invoices tab, check for the discount notice, click on it, then create the discount transaction(s). Formerly, all you had to do was recognize the receipt was less than the billed amount and enter the adjustment on the receipt.

I have tried to test this, now, but cannot. The discount pending notice does not appear in the Sales Invoices tab despite having edited existing invoices created new ones offering a discount. Those invoices show as still being pending, but there is no method for activating the discount. I’m using v 18.3.13. Was the feature disabled sometime after v18.3.8?

@sharpdrivetek @Tut the latest version (18.3.14) will generate a credit note with proper allocations to each line item.

You don’t have to do this every time you take in a receipt. Pending credit notes to be issued will wait. As for “recognizing the receipt” is eligible for early payment discount, it’s not as simple. First of all, a lot of people import their bank statements, have bank rules set up to automatically categorize these receipts so there isn’t really an opportunity to determine which receipt is eligible for early payment discount and which is not. When Manager has bank feeds, your receipts will be created automatically.

But even if you do enter receipts manually, it’s not always as easy as adding the discount to the receipt. The invoice could have mix of tax codes, then you have to break down your discount by tax code or perhaps you do not want “generic” expense account “Discounts given”, you want to offset original accounts on sales invoice so your income is not inflated. And if your invoice contains multiple line items, then you have to laboriously calculate early payment discount per line item. Why should software put you through all this work if it already has all information do generate correct credit note automatically?

But even if you want to do all that manually, your customer might still be confused why their customer statement has these receipts with inflated amounts rather than showing actual amounts paid + early payment discounts given.

So lots of businesses would take advantage of early payment discounts but doing it manually is a deal-breaker for most.

OK, @lubos, you have convinced me about the credit note for an early payment discount on a sales invoice. But I have two problems trying to test this:

  1. When I enter a sales invoice with a future due date, the Sales Invoices tab status shows me it is due in X days. But, despite the early payment discount being entered, the notice does not appear. So I cannot follow through with the rest of the process. I must be doing something wrong.

  2. There is no way to handle an early payment discount on a purchase invoice except the original manual method. Are you planning to extend this feature to purchase invoices?

thanks @lubos
i found the time to test this feature. below are my findings.

  1. in sales invoices there is no provision to set a date as to until how many days the early payment discount is valid. at present if the due date is set to 30 days and if the customer pays on the 29th day it would still be considered as an early payment. this approach is not acceptable. there should be a provision to set the date or number of days until early payment discount will be valid.

  2. after the invoice has been created, it would be better if the line shows the total amount the customer will have to pay if he decides to pay early. like i have discussed earlier, even the customers can get confused as to how we would be calculating the discount, whether it is applicable on the tax exclusive amount or the tax inclusive amount.

  3. once we click the banner in sales invoice image and the credit note is created, Manager does not directly show the credit note just created. instead it goes back to the list of sales invoices. this behavior may sometimes make the user forget the whole credit note thing and may end up not sending it to the customer. i understand there would be difficulties if there is more than one credit note to be issued, but atleast it would help if Manager shifts to the Credit Notes tab.

  4. in case there is more than one invoice paid early by the same customer, Manager should be creating a single credit note and not as many as the number of sales invoices.

  5. also, i stumbled upon one thing i missed to note all these days. the credit notes do not show the applicable invoice number and the invoice date. it would be better if the invoice number and invoice date is showed as a column against each line item in case there is more than one invoice involved. the invoice details is mandatory for Indian users. please refer the attached link in my post #7.

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Feedback from me.

  1. Can we have defined amount of how much the client has to pay to eligible for early discount. Is a bit difficult when the banner notify for eligibility when he doesn’t even pay at satisfactory amount.

  2. Can the Sales Invoice be insert of a note for early discount incorporate in invoice if its active at what amount?

The latest version (18.3.18) allows to set how many days from issue date will make early payment discount eligible.

Then when invoice is issued, the totals will contain the calculation.

Looks like a big improvement, @lubos. But I still can’t test this because I don’t get the pending notice for eligible invoices. My invoices show the discount amount, early due date, and discounted total. But without the pending notice to click on, I cannot follow through. Can this possibly be a Mac thing?

Could you show screenshot of totals on invoice?

Sure. Here’s the entire invoice:


And here is the top of the Sales Invoices tab listing, with no pending notification:

I’m also emailing you a backup file for this test company.

the notification above sales invoices would only appear after you have made the payment transaction. i am just curious if you had done that because your invoice still says its due.

@sharpdrivetek is correct. Manager won’t offer to create credit note if the invoice is not eligible for early payment discount.

thanks for the improvement @lubos
please consider my other suggestions regarding the creation of credit notes too.

OK. Now I understand. The release note’s original wording did say “If customer pays…before the due date, they will be eligible for early payment discount.” What it did not say was that the receipt has to be entered before the eligibility notice appears. I expected to be able to activate the discount and then be able to enter the discounted amount against a reduced balance.

With full understanding, the notification works. And the concept is very slick. But there are two problems:

  1. If the payment that qualified the invoice for the early discount is deleted after the credit note is created, the credit note remains; therefore, the balance due on the invoice stays at the discounted amount. Worse, another early payment discount is offered on the original invoice total, compounding the discount. Suppose someone enters a receipt against the wrong invoice, then deletes it to start over. Or imagine someone erroneously enters a cash transaction instead of a bank transaction and reverses it. You would end up with double discounting. As an example, for the same invoice illustrated above, a receipt for the discounted amount was created, then deleted. The sales invoice now shows:


  2. The second, related problem arises with partial receipts. If a qualifying payment is edited and reduced after the credit note is created, all indication of the availability of an early payment discount vanishes from the completed sales invoice, even if there is still time to earn it. This might happen if a partial receipt is accidentally entered against a sales invoice without remembering to edit the amount, instead allowing the default, full balance due to remain. When the error is discovered and corrected, the sales invoice no longer displays the possibility of a discount. In the example below, payment of the full discounted amount was entered in time to qualify. A credit note was generated. Then, the receipt was adjusted to reflect an actual amount 10.00 less:

    But there is still time to qualify for the discount if the remaining 10.00 is paid. Yet if the remaining 10.00 is paid in time, no eligibility notice appears. Meanwhile, the 29.90 credit note remains in force. And if the additional 10.00 is not received in time, the credit note still remains in force.


What should happen is that, if the qualifying payment is deleted or reduced below the full balance due, the credit note should be deleted. Users are likely to forget that a credit note has been issued, since it happens behind the scene. But if the unearned credit note is deleted, both problems above go away.

I have done some research and this is what the law in my country says about adjustment on tax on invoices due to some event after issuing the tax invoice. And below is what it says

Adjustments 45.

(1) This section applies where in relation to a taxable supply by a taxable person (a) the supply is cancelled; (b) the nature of the supply has been fundamentally varied or altered; © the previously agreed consideration for the supply has been altered by agreement with the recipient of the supply, whether due to an offer of a discount or for any other reason; or (d) the goods or services or part have been returned to the supplier.

(2) Where in addition to the conditions in subsection (1), the taxable person making the supply has (a) given a tax invoice in relation to the supply and the amount shown on the invoice as the tax charged on the supply is incorrect because of the occurrence of any one or more of the events mentioned in subsection (1), or
(b) filed a return for the period in which the supply was made and has accounted for an incorrect amount of output tax on that supply because of the occurrence of any one or more of the events mentioned in subsection (1), the taxable person making the supply shall make an adjustment as provided under subsections (3) and (5).

(3) Where the output tax properly chargeable in respect of the supply exceeds the output tax actually accounted for by the taxable person making the supply, the amount of the excess shall be regarded as tax charged by the person in relation to a taxable supply made in the tax period in which the events referred to in subsection (1) occurred.

(4) For purposes of subsection (3), the taxable person making the supply shall issue to the recipient of the supply a tax debit note containing the particulars specified in the Fourth Schedule and in the form specified by the Commissioner-General.

(5) Subject to subsection (6), where the output tax actually accounted for exceeds the output tax properly chargeable in relation to that supply, the taxable person making the supply shall be allowed a deductible input tax for the amount of the excess in the tax period in which the events referred to in subsection (1) occurred.

(6) For purposes of subsection (5), the taxable person making the supply shall issue to the recipient of the supply, a tax credit note containing the particulars specified in the Fourth Schedule and in the form specified by the Commissioner-General.

(7) A deductible input tax is not allowed under subsection (5), where the supply has been made to a person who is not a taxable person, unless the amount of the excess tax has been repaid by the taxable person to the recipient, whether in cash or as a credit against an amount owed to the taxable person by the recipient. (8) A person who (a) fails to provide a required tax credit note or tax debit note; or (b) provides a tax credit note or tax debit note otherwise than as required by this section is liable to
(a) a penalty of three times the amount of tax involved or two hundred and fifty currency points whichever is greater; and
(b) the penalty imposed under section 58,

What I make out of this is that

  1. Manager.io is doing this correctly as expected by country tax rules.

  2. The credit note would have to be titled a Tax Credit Note if the Invoice is titled a Tax Invoice

  3. If A tax credit note won’t be issued, The cash discount amount must be an expense and the tax component wont change as i suggested earlier and therefore the reduction on amount receiveble wont cause a reduction on the tax amount receivable.

So the credit note approach which is a legal document which changes amount receivable on an invoice is what is needed to also change the tax component as Manager is doing correctly.

  1. If I want my cash discount offered to show as an expense and leave the sales amount intact, I can edit the credit note and change the accounts from the sales accounts selected by default by the credit note to the desired expense account (Cash Discount Account) and the same effect is what i will see.

So going forward @lubos, you have to let the description of the Credit note show if a user is in the credit note tab

No field for description in credit note

The benefit of showing the description is that. It will enable the user to easily search and find credit notes which were issued for cash discount using the search box and this text “Early payment discount”. The user can then change the accounts to an expense account if they wish or for any other purpose (Tax audit, External Audit, final adjustment etc)

Does anyone think i’m misinterpreting the tax law i pasted above? Please comment

I totally agree that this is extended for purchases invoices.

I agree it shouldn’t be that way.