Purchase Discount Settings

Purchase Discount Settings

Purchase discount settings in EquiBillBook help you manage supplier discounts, track discount accounts, and configure discount calculation methods. This guide explains how to configure and manage purchase discounts effectively.

Understanding Purchase Discounts

Purchase discounts are reductions in purchase price offered by suppliers. Proper discount management helps:

• Reduce purchase costs and improve margins
• Track supplier discount offers
• Maintain accurate purchase costs
• Proper accounting of discount transactions
• Analyze supplier discount patterns
• Maximize cost savings opportunities

Types of Purchase Discounts

EquiBillBook supports various discount types:

• Regular Discount: Standard discounts applied to purchases
• Special Discount: Additional discounts beyond regular discounts
• Quantity Discount: Discounts based on purchase quantity
• Cash Discount: Discounts for early payment
• Volume Discount: Discounts based on purchase volume
• Free Quantity: Free items received from suppliers

Accessing Purchase Discount Settings

To configure purchase discount settings:

1. Navigate to Settings → Purchase Settings
2. Look for discount-related options
3. Enable or disable discount features
4. Configure discount accounts (if Accounts module is enabled)
5. Set up discount calculation methods
6. Click "Update" to save changes

Enabling Special Discount

The Special Discount feature allows additional discounts beyond regular discounts:

• Enable Special Discount: Check this option to allow special discounts on purchases
• Useful when suppliers offer additional discounts beyond standard rates
• Helps track exceptional discount offers
• Separate accounting for special discounts (if Accounts module enabled)
• Better tracking and analysis of discount patterns

Enabling Free Quantity

The Free Quantity feature allows recording free items from suppliers:

• Enable Free Quantity: Check this option to allow free quantity entries
• Useful for "Buy X Get Y Free" offers
• Helps track promotional free items received
• Maintains accurate stock records including free items
• Proper inventory valuation without affecting purchase cost

Discount Calculation Methods

Purchase discounts can be calculated in different ways:

Percentage Discount

• Discount calculated as a percentage of the item price
• Example: 10% discount on ₹1,000 = ₹100 discount
• Common for volume-based discounts
• Flexible for different discount rates

Fixed Amount Discount

• Discount as a fixed amount
• Example: ₹50 discount per item
• Common for cash discounts or flat offers
• Simple and straightforward

Discount on Total

• Discount applied to the total purchase amount
• After all line items are totaled
• Useful for bulk purchase discounts
• Can be percentage or fixed amount

Discount per Line Item

• Discount applied to individual line items
• Each item can have different discount
• More granular discount control
• Useful for item-specific offers

Discount Account Configuration

If you have the Accounts module enabled, you can link discounts to accounting accounts:

Discount Account

• Purpose: Account for recording regular purchase discounts
• Account Type: Usually an Expense account or Cost of Goods Sold reduction
• Configuration: Select the appropriate account from the dropdown
• Accounting Impact: Discounts reduce purchase cost and are reflected in accounts

Special Discount Account

• Purpose: Separate account for special discounts
• Account Type: Expense account or cost reduction account
• Configuration: Select account for special discounts
• Benefit: Separate tracking of special discount offers
• Reporting: Helps analyze special discount patterns

Tax on Discount

Configure how taxes interact with discounts:

• Tax Before Discount: Calculate tax on original amount, then apply discount
• Tax After Discount: Apply discount first, then calculate tax on discounted amount
• Follows local tax regulations
• Important for GST/VAT compliance
• Ensures accurate tax calculations

Discount Settings in Purchase Documents

When creating purchase documents with discounts:

• Enter discount amount or percentage per line item
• System automatically calculates discounted amount
• Total discount is displayed in discount column
• Final amount reflects discounts applied
• Discount details included in purchase reports

Best Practices for Purchase Discounts

• Document discount terms: Keep records of supplier discount agreements
• Regular review: Periodically review discount offers from suppliers
• Maximize savings: Take advantage of available discounts
• Accurate recording: Ensure discounts are correctly recorded
• Account linking: Properly link discount accounts for accurate accounting
• Tax compliance: Ensure tax calculations include discounts correctly
• Supplier negotiation: Use discount data for supplier negotiations

Discount Reports and Analysis

Use discount data for analysis:

• Discount Summary: Total discounts received
• Supplier Discount Report: Discounts by supplier
• Item Discount Report: Discounts by item
• Special Discount Report: Track special discount offers
• Cost Savings Analysis: Analyze savings from discounts

Common Discount Scenarios

Volume Discount

• Supplier offers discount based on quantity purchased
• Example: 10% discount for orders above 100 units
• Apply discount when quantity threshold is met
• Track volume discounts for cost analysis

Early Payment Discount

• Supplier offers discount for early payment
• Example: 2% discount if paid within 10 days
• Record discount when payment is made early
• Helps improve cash flow management

Promotional Discount

• Supplier offers temporary promotional discounts
• Record as special discount if enabled
• Track promotional offers separately
• Analyze promotional discount effectiveness

Free Quantity

• Supplier offers free items with purchase
• Enable Free Quantity feature
• Record free items received
• Maintains accurate inventory without affecting cost

Integration with Other Features

Purchase discounts work with:

• Purchase Settings: General purchase configuration
• Accounts Module: Discount account linking
• Tax Settings: Tax calculation with discounts
• Supplier Management: Supplier-specific discount terms
• Reporting: Discount analysis and reporting

Troubleshooting

Discount not applying correctly?

• Check if discount feature is enabled in settings
• Verify discount amount or percentage entered correctly
• Check discount calculation method
• Ensure discount is not exceeding item price

Special discount not available?

• Verify "Enable Special Discount" is checked in Purchase Settings
• Check if Accounts module is required for special discount
• Ensure proper permissions are set

Discount account not visible?

• Ensure Accounts module is enabled in your subscription
• Check if accounts are properly set up
• Verify user permissions for account settings
• Ensure accounts are active and not deleted

Tax calculation with discount incorrect?

• Check tax on discount configuration
• Verify whether tax should be before or after discount
• Review tax calculation method
• Ensure compliance with local tax regulations

What's Next?

After configuring purchase discount settings, you should:

1. Set up discount accounts (if Accounts module enabled)
2. Configure supplier discount terms
3. Train your team on entering discounts
4. Set up discount reports
5. Test discount calculations with sample purchases
6. Review discount patterns regularly
7. Negotiate better discount terms with suppliers

Proper purchase discount configuration helps maximize cost savings, maintain accurate purchase costs, and improve overall profitability. Ensure discount settings are correctly configured and regularly reviewed.