# BA1: Settlement Discounts

Hi,

Have re-read this topic and the examples in the books several times and I just cannot get my head around how it works.

For argument sake, let me explain simply what I understand:
1. To calculate invoice with Trade+Settlement discount
- Total NET price : Qty x Unit Price = (A)
- Trade Discount : (A) x %Tdiscount = (B)
- NEW NET price : (A) - (B) = (C)
- Settlement Discount : (C) x %Sdiscount = (D)
- FINAL NET price = (C) - (D) = (E)
- VAT : (E) x %VAT = (F)
- INVOICE total : (C) + (F) = (G)

So, Customer would pay (G) - (D) if within settlement period, else pay (G).

But, why INVOICE total = (C)+(F)=(G)?!!!
Shouldn't the invoice be:
VAT : (C) x %VAT = (F1) and therefore invoice = (C) + (F1)?
And if customer pays within settlement period, then they pay:
VAT : (E) x %VAT = (F2) and invoice = (E) + (F2)?

Or is this how's its always been done and we just have to live with it?

Pls help, I am tearing my hear out on just this topic area for days!:confused1: