Settlement discount and VAT

traceyc
traceyc Registered Posts: 1
might be a silly question... Is there any legislation in place which dictates the settlement terms that can be offered by a company? Does it have to specify x number of days from invoice date or can settlement discount still be taken for example 30 days after end of month? I am asking this as Sage have said that we can only offer settlement discount using the x number of days after invoice date and cannot use 30 days after end of month due to legislation. I haven't seen this in writing anywhere, but just wondered if anyone has? I think Sage are incorrect, but wanted to make sure before I corrected them!

Comments

  • MarieNoelle
    MarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,433
    Hi
    this link may be useful and specifically:

    "Where there is an agreed credit period, and the supplier has agreed, either in writing or orally, a credit period with the purchaser, the payment is late if it is made after the last day of the credit period.

    If no credit period has been agreed, then the Act sets a default period of 30 days after which interest can run. This default period does not constitute a statutory credit period. Where no credit period is agreed in a contract, the principal debt will still become due from the moment the goods are delivered or the service performed.

    The 30-day default period starts running from the later of the actions:

    the delivery of the goods or the performance of the service by the supplier; or
    the day on which the purchaser has notice of the amount of the debt. A payment is late once the agreed credit period or the default period has expired.
    "

    I hope this helps.
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