Discount for promt payment

Discount for promt payment

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Please could someone confirm that I am on the right lines with this very quick (and simple) query. I am undertaking the book-keeping for a client who wants to start offering a discount for prompt payment - am I correct in thinking that I should enter the WHOLE of the net amount prior to the discount in the sales ledger but work out the VAT on the net amount minus the discount on the assumptiion that the customer will pay within the prescribed limit?

Many thanks in advance for anyone kind enough to help!

Carole May

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By User deleted
17th Apr 2008 09:04

Yes and VAT stays at lower rate
I was at an HMRC VAT seminar last week. I found out that if the vendor offers a discount the lower VAT amount is applied to the invoice, and stays this amount even if client pays late. I found this very bizarre, so asked the speaker to confirm and they said yes.

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By User deleted
17th Apr 2008 08:36

correct!
Yes - just as you described.

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