Business management of potential supplier credits

I have a retail plus wholesale business… I have Distributorship of many companies… Usually companies invoice us at higher rates and at the end of the quarter they issue us credit notes like cash discounts and product discounts… I want to keep record of upcoming credit notes and then want to cross check from the companies portal after they got issued… So please help me to how can I keep records in simplest form possible

There is no way to do this in Manager. Accounting is about recording things that have already happened, not projecting what might happen in the future. You will need to make such projections through some other means.

I am not consent about predicting something… I will give u one example to understand my issue… For example company is giving 20 rupees discount for item A in the month of jan and 15 rupees in the month of feb and 10 rupees in the month of March… And similarly giving cash discount 5% for jan 4 % for the and 3% for march… But company is not giving credit note in the given month… It gives credit to your account after quarter end means in April or may… So I want to keep recors of these discounts while purchasing material A and like this other item and then cross check with companies credit note when they got issued… So how can I do this???

I understood your request from your first post. But as I already told you, you can’t do this. The problem is that your supplier is not giving you a discount in January, February, or March. The supplier is giving you a rebate in April or May in the form of a credit note. When they issue their credit note, you should enter that in Manager as a debit note. You can apply the debit note to the exact purchase invoice(s) on which you earned it. This will lower your Accounts payable balance for that supplier.

As you enter the debit note, you will have the opportunity to verify that your supplier has given you the correct rebates. But you cannot enter the discount in advance because it has not been given yet. No transaction has occurred.

Further, it sounds like you may not know what the rebate will be in advance. While you did not say this, it sounds like you might be describing a variable rebate program in which your rebate depends on the volume of business you do. In such a situation, you might not reach the required quota for the rebate you expected. If you had entered that expected rebate into your accounting records, you would then have an error.

There maybe a process available to you but first you need to confirm more about the mechanics.

Q - Are the discounts based upon the Purchase Invoice only, no sales or other requirements ?
Q - Do you pay the Purchase Invoice in full (no discount deductions) prior to the credit ?
Q - Is the Suppliers credit offset against later dated invoices (Apr / May) payment ?

For 1st two question the answer is yes… And for third one the answer is no

So how do you use or what do you apply the Suppliers credit against when it is received ?

@TUSHAR_AGRAWAL, whilst you haven’t provided clarity to Q3, that component isn’t actually required “to keep record of upcoming credit notes and then want to cross check from the companies portal after they got issued”

Just because the Supplier doesn’t document the discount until a later date doesn’t mean that you can’t account for them as they arise - that being accrual accounting. As the offered discounts are based on actual purchases, then the recording and cross checking can be done by the below process.

  1. Under Customise activate the Special Accounts tab.

  2. Under Settings > Chart of Accounts create a BS > Assets account called Discounts Outstanding - tick the Control Account box and select made up of Special Accounts.

  3. Under Settings > Chart of Accounts create a P&L > Income account called Discounts Received.

  4. Under the Special Accounts tab create accounts for the Suppliers which offer these discounts with the Control Account > Discounts Outstanding

  5. Now when you receive a discount related Purchase Invoice, calculate the offered discount and add two additional lines to the Purchase Invoice which will contra off.

  6. This will record under the Special Accounts tab the discount documents to be received.

  7. When the discount document is received, compare it to the accrual and create a Debit Note using the Control Account, any calculation adjustments can also be made at this time…

Hi Brucanna
Nice to see this reply i was having same problem. Little different from this one.

  1. Our supplier offer discount on Purchases occasionally.
  2. And we want to deduct that discount from Purchase Invoice Total. i.e we don’t want to pay the purchase invoice in Full.

Enter the discount on the purchase invoice if it offered at the time. See Apply a discount to a line item | Manager.

It was so easy that I overlooked it :slight_smile: