Apply the discount policy is an integral part to promote sales and create benefits for customers. To ensure legitimacy in bookkeeping, business needs to set up invoice discounting accordance with the law. Understand the types of bills discounted and process to invoice properly helps business financial management efficiency. Let's Accnet find out right under article later!
1. Invoice discounting is what?
Invoice discounting (invoice, discounts) is type of bill that the business establishment to acknowledge discounts (discount) is applied to customers in the transactions of purchase and sale of goods/provision of services. The discount can be applied immediately at the time of sale or after sales reach a certain level by agreement between the two sides. Kinds of discount include:
- Trade discount
- Payment discount
- Discount sales
- Discount by promotion
According to Article 16, circular no. 39/2014/TT-BTC on guiding the implementation of Decree 51/2010/ND-CP and Decree 04/2014/ND-CP of The government on the bill of sale of goods and supply of services, the discount is made in many forms, should be clearly shown on the invoice. Each type of discount are way accounted for, recorded separately under the provisions of the law to ensure legitimacy, accuracy in financial statements of business.
2. How to create/export bill discounting under the Ministry of Finance
2.1. How to create invoice discounting commercial
Trade discount is the discount for our customers when they buy goods in bulk or reach sales of certain over a period of time. Trade discount is usually applied to increase the volume of sales and encourage customers to make larger transactions (Article 4, circular 219/2013/TT-BT)
How to set invoice discounting trade:
- Specifies the number of goods, the rate of trade discount is applied on the invoice.
- Account trade discount is deducted from the total value of goods/services.
Business sales worth $ 200 million, applied trade discount of 5% for orders from 100 million or more.
- Debt TK 111/112 (Cash/Bank): 190 million
- Debt TK 521 (trade Discount): 10 million
- Have TK 511 (sales revenue): 200 million
2.2. How to set up bill payment discount
Payment discount is the discount is applied when customers pay earlier than the prescribed period. The purpose of the payment discount is encouraging customers to pay immediately or in a short period of time, help businesses improve cash flow (Article 16, circular no. 39/2014/TT-BTC)
How to set invoice discounting payment:
- Recorded the discount rate payment (for example: 2%) and the amount of the discount directly on the bill.
- Account the discount is deducted from the total payment amount.
Customers purchase worth $ 100 million, which is 2% discount if paid within 10 days.
- Debt TK 111/112 (Cash/Bank): 98 million
- Debt TK 635 (financial Costs): 2 million
- Have TK 511 (sales revenue): 100 million
2.3. How to create invoice discounting business number
Discount sales is the discount to be applied based on total sales accumulated that the client has achieved in a certain business. Kinds of discount is usually used to encourage the long-term cooperation, increase transaction value (circular 219/2013/TT-BTC and circular no. 39/2014/TT-BTC)
How to set invoice discounting business number:
- Account discount sales be recorded on the invoice corresponding to the sales achieved in the states.
- Discount is deducted from the total amount to be paid by the customer.
The client achieved the turnover of 500 million in a quarter, enjoy a 3% discount on sales.
- Debt TK 521 (Discount sales): 15 million
- Have TK 511 (sales revenue): 15 million
2.4. How to set the invoice discount/discounted by the promotion
Discount promotion is a discount applied in the promotion in particular, often take place in a limited amount of time to promote sales/reach new customers (Article 7, circular 119/2014/TT-BTC)
How to set invoice discounting by promotion:
- Notes discounted by the promotion on the bill with a rate of % (percent)/specific amount.
- Account the discount is deducted from the total amount of payment or apply for the next order.
Customers buy 10 products, get 10% discount for next orders worth $ 50 million.
- Debt TK 641 (Cost of sales): 5 million
- Have TK 511 (sales): 5 million
3. Process invoice discount/discount standard
Step 1: sign up to receive the discount on the bill
- When the student discount (payment, commerce, sales, promotion), businesses need to recognize the discount directly on the bill of sale. The discount is deducted from the sale price, including the discount rate, the discounted amount.
- If the discount arises after the invoice has been set (for example: discount sales final), business to invoice adjustment. Bill adjustments will specify the chargeback, the information necessary to adjust the value recorded on the original invoice.
According to circular no. 39/2014/TT-BTC, the adjusted bill in the case of the discount after the establishment of the original invoice is mandatory
Step 2: Handling VAT when there is discount
- VAT is charged on the selling price minus trade discount. If the discount applied after establishment invoice discounting original, VAT must be adjusted respectively on the bill adjusted.
- Payment discount does not affect the TAXABLE price. VAT is charged on the value of goods before payment discount.
According to circular 219/2013/TT-BTC, the business must declare and pay VAT based on the value subtract the discount (for trade discount) or value hasn minus discount (for payment discount)
Step 3: storage and preservation invoice discounting
Invoice discounts shall be stored together with the relevant documents. Storage time invoice discount is 10 years according to the Decree 123/2020/ND-CP.
Enterprises need to adopt measures to manage internal as check for invoice reconciliation, storage invoice discounting along with the contract of sale, memorandum of adjustment, the vouchers related.
Invoice discounts play an important role in the recognition of the discount deals and help business maximize profit. Hopefully, through this article, you have captured the necessary knowledge about how to create/export invoice discounting to apply efficient in business operations.
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