Several problems have been introduced recently with credit notes created as part of recording receipts against sales invoices with early payment discounts.
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Previously, a percentage discount was calculated on the full amount of the sales invoice, including tax. When a receipt qualifying for the early payment discount was entered, the full amount of the offered discount was applied to Accounts receivable, as though the amount was tax-inclusive. Now, however, the credit note is treated as a tax-exclusive transaction. The tax is added to the discount, resulting in a larger than intended credit and the sales invoice showing as overpaid, even though the customer paid (and the business received) exactly the amount offered with the early payment discount.
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The corresponding adjustment to the applicable tax liability account is also overstated.
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The same things happen when the discount is specified as an exact amount instead of a percentage.
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The credit note produced by following the process in the Guide, Record early payment discounts on receipts for sales invoices | Manager, no longer includes any indication the credit note is for an early payment discount. Neither of the indications in the final two points in the Guide (just before the Caution statement) is included in the current version of the program. Were these possibly related to previous internal coding to treat the application of the discount as tax-inclusive?