Vendor Payment Discounts and Payment Terms in Microsoft Dynamics 365 Business Central

Scenario: you have a vendor that offers a 2% discount on the net amount if they pay the invoice in full within the first ten (10) days of the invoice date. Otherwise, the full invoice amount is due in 30 days without the discount. 



System Configuration

Within Business Central you will want to set up a new Payment Terms Code for this specific payment term. 
  1. Search for Payment Terms
  2. Click New to add a new line
  3. Update to reflect the information below


Once the Payment Term is set up you can assign this to a specific vendor by opening up the Vendor Card and assigning.
  1. Open Vendor Card
  2. Add Payment Terms Code to the Payments section of the Vendor Card



Verify that the Vendor Posting Group has the correct G/L Account listed for the Payment Discounts. 
  1. Open the Vendor Posting Groups
  2. Review or update the Payment Disc. Debit Acc. and Payment Disc. Credit Acc. fields with the correct Payment Discounts G/L Account. In my system account 68290 is set up for Purchase Discounts. 



Processing

Now that the configuration is completed let's walk through the steps of creating a vendor and payment with the new payment terms.
  1. Create new Purchase Invoice for vendor. The Payment Terms will default to what is set up on the vendor. Review and post invoice.





  2. Next add the vendor payment to the Payment Journal. In this case I'm going to select this vendor invoice to be paid. You can see that I'm only paying them $4,900 because the system calculated a $100 discount. 



    If I go a step further and do a Preview Posting I see that the G/L is being hit three (3) times. 


    Drilling into that entry I see $100 going to my Purchase Discounts G/L Account that was set up in the Vendor Posting Group. 


    At this point everything looks good so I can continue with processing the payment and then post the Payment Journal. 

    Written by: Kristen Hosman, Microsoft MVP


     

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