Settlement Discount

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi there<BR><BR>Looking for help on settlement discount. As far as I know when generating an invoice with settlement discount you calculate the VAT based on the price with settlement discount included.<BR><BR>But what happens when the invoice is paid after the settlement discount period and the discount is not due? Does the customer pay the original invoice amount or is the VAT increased (calculated on the price without settlement discount)?<BR><BR>Hope the question makes sense and someone can help.<BR><BR>Thanks<BR>Sharon

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Settlement Discount

    They will pay the amount on the Invoice. So its the full amount (regardless how you calculated the VAT on it)<BR><BR>If they where in the time period and was to take the settlement figure, they would send less money than on the Invoice and then its your job to record the 2 amounts in the receipts book. (chq amount and settlement amount)<BR><BR>In summery, once you have raised an invoice it doesnt change.<BR><BR>Hope this makes sense.<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Settlement Discount

    Thanks Amanda<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Settlement Discount

    Something my tutor told us was you always assume that people will take a settlement discount becuase it is cheaper for them to pay. This will therefore not alter the VAT figure. However, if they don't pay - for whatever reason - the invoice still stands.

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