Discount Settings

Sales Discount Settings

Sales discount settings allow you to configure how discounts are applied to sales invoices, quotations, and orders. Proper discount configuration helps you offer competitive pricing while maintaining profitability.

Accessing Sales Discount Settings

To configure sales discount settings:

1. Navigate to Settings → Sales Settings → Sale Settings
2. Look for the Discount Settings section
3. Configure default discounts, discount types, and discount accounts

Default Sale Discount

Set a default discount that will be automatically applied to new sales documents:

• Default Discount Amount: Enter the default discount value
• Applied To: Can be applied to:
  • All new invoices
  • Specific customer groups
  • Specific items or categories
• Override: You can still change or remove the discount for individual invoices

Discount Type

Choose how discounts are calculated:

Percentage Discount

• Calculation: Discount = (Invoice Amount × Discount Percentage) / 100
• Example: 10% discount on ₹1,000 invoice = ₹100 discount
• Best for: General discounts, promotional offers
• Flexibility: Works well for varying invoice amounts

Fixed Amount Discount

• Calculation: Discount = Fixed Amount
• Example: ₹50 discount on any invoice
• Best for: Flat discounts, coupon codes, special offers
• Consistency: Same discount amount regardless of invoice value

Discount Application Levels

Discounts can be applied at different levels:

Item-Level Discounts

• Apply discount to specific items in the invoice
• Different items can have different discount rates
• Useful for:
  • Clearance items
  • Promotional products
  • Volume discounts on specific items

Invoice-Level Discounts

• Apply discount to the entire invoice
• Calculated on subtotal (before tax)
• Useful for:
  • Customer loyalty discounts
  • Bulk purchase discounts
  • Seasonal promotions

Special Discount Settings

Configure special discount features:

Enable Special Discount

• Allow Special Discounts: Enable this option to allow discounts beyond standard discount rules
• Use Cases:
  • Manager-approved discounts
  • Negotiated pricing
  • Special customer arrangements
• Control: May require special permissions to apply

Special Discount Account

• Account Selection: Choose the accounting account for recording special discounts
• Purpose: Separate tracking of special discounts in accounting
• Reporting: Helps analyze discount impact on profitability

Discount Account Configuration

Link discounts to accounting accounts:

• Discount Account: Select the account where discounts are recorded
• Purpose:
  • Track discount expenses
  • Analyze discount impact
  • Maintain accurate financial records
• Common Accounts:
  • Discount Allowed (Expense)
  • Sales Discount (Expense)
  • Promotional Expenses

Customer Group Discounts

Set different discount rates for different customer groups:

• Wholesale Customers: Higher discount rates
• Retail Customers: Standard or no discount
• VIP Customers: Special discount rates
• Configuration: Set up in customer group settings

Volume-Based Discounts

Configure discounts based on order quantity or value:

• Quantity Discounts: Higher discounts for larger quantities
• Value Discounts: Discounts based on total invoice value
• Examples:
  • Buy 10+ items: 5% discount
  • Order over ₹10,000: 10% discount
  • Tiered discounts: 5% for ₹5,000+, 10% for ₹10,000+

Early Payment Discounts

Offer discounts for early payment:

• 2/10 Net 30: 2% discount if paid within 10 days
• 1/15 Net 45: 1% discount if paid within 15 days
• Benefits:
  • Encourages faster payment
  • Improves cash flow
  • Reduces collection efforts
• Configuration: Set up in payment terms

Discount Limits and Controls

Set limits on discount amounts:

• Maximum Discount: Set a cap on discount percentage or amount
• Approval Required: Require approval for discounts above a certain threshold
• User Permissions: Control who can apply discounts
• Audit Trail: Track who applied discounts and when

Discount Calculation Order

Understand how discounts are calculated:

1. Item Subtotal: Calculate item prices × quantities
2. Item Discounts: Apply item-level discounts
3. Invoice Subtotal: Sum of items after item discounts
4. Invoice Discount: Apply invoice-level discount
5. Tax Calculation: Calculate tax on discounted amount
6. Final Total: Subtotal + Tax - Discounts

Best Practices

• Set realistic defaults: Use default discounts that match your pricing strategy
• Monitor discount usage: Regularly review discount reports
• Control special discounts: Limit who can apply special discounts
• Track discount impact: Use discount accounts to analyze profitability
• Document discount policies: Keep clear records of discount rules
• Train your team: Ensure users understand discount policies
• Review regularly: Periodically review and adjust discount settings

Discount Scenarios

Retail Business

• Typically: No default discount or small percentage (5-10%)
• Special discounts: For clearance, promotions, loyalty customers
• Focus: Controlled discount application

Wholesale Business

• Typically: Higher default discounts (10-30%)
• Volume discounts: Based on order quantity
• Customer group discounts: Different rates for different groups

Service Business

• Typically: Minimal or no default discount
• Special discounts: For long-term contracts, referrals
• Early payment: Offer discounts for advance payment

Discount Reports

Track and analyze discount usage:

• Discount Summary: Total discounts given in a period
• Customer Discount Report: Discounts by customer
• Item Discount Report: Discounts by item
• Profitability Impact: How discounts affect profit margins

Troubleshooting

Discount not calculating correctly:

• Verify discount type (percentage vs fixed)
• Check discount amount or percentage
• Review calculation order
• Ensure tax is calculated on discounted amount

Default discount not applying:

• Verify default discount is set in settings
• Check if customer or item has specific discount
• Review invoice creation process
• Clear browser cache if needed

Special discount not available:

• Verify "Enable Special Discount" is enabled
• Check user permissions
• Review discount settings
• Contact administrator if needed

Integration with Other Features

Discount settings work with:

• Customer Groups: Different discounts for different groups
• Payment Terms: Early payment discounts
• Items: Item-specific discount rates
• Accounting: Discount account tracking
• Reports: Discount analysis and reporting

What's Next?

After configuring discount settings, you should:

1. Set appropriate default discount for your business
2. Configure discount accounts for accounting
3. Set up customer group discounts if applicable
4. Test discount application on sample invoices
5. Review discount reports regularly

Proper discount configuration helps you offer competitive pricing while maintaining control over profitability and ensuring accurate financial tracking.