Vendors typically offer discounts to retailers. There can often be multiple discounts for any given item. By adding all the discounts to the purchase order,
the actual costs of the products are tracked, resulting in an accurate profit
and loss report. Also, the precise amount owed to the vendor can be calculated
based on the purchase order.

To configure multiple discounts:

  1. Open the Client Settings and enable the Multi-Discount
    for Purchase Orders
  2. Click on PO Discounts Type
    in the Settings menu.
  3. Add a discount name to the grid. You will define it later.
  4. Company Settings >
    Company > Toolbox > Vendors > Select a vendor
  5. Click on the Multi Discounts
    tab in the side menu.
  6. Select the discount type.
  7. Define whether it’s a dollar amount or a percentage.
  8. Enter a discount amount.
  9. Define whether the discount calculation is simple or compound.

Understanding Simple and Compound Discounts.

Simple discounts are added
together first and only then applied to the purchase order. For example, let’s
say the subtotal on the purchase order is $100 and you have 2 simple discounts
of 3% each. The discounts are added together for a total of 6%, and then
applied to the purchase order for a grand total of $94.

Compound discounts are
applied individually to the purchase order in succession. Using the same
purchase order of $100, with 2 compound discounts of 3% each, the first 3% is
applied for a subtotal of $97. The second 3% is then applied to the $97 for a
grand total of $94.09.

If there are multiple simple
and compound discounts, the simple discounts are added together and applied.
Only afterward are the compound discounts applied individually.

Adding Multi-Discounts to the PO

Mutli-discounts can be added at the header level or at the item level.

    • Header discounts – A single discount value that is applied to all the items in the purchase order. For example, if the discount is $2 dollars, then $2 will be deducted from the cost of every item in the PO.
    • Line Item discounts – Unique discounts applied to individual units being ordered. Each item can have a separate discount value. Discounts are calculated per unit.
  1. The header discounts appear
    in the grid above the ordered items. Only the discounts configured for this vendor appear, but you can
    add and configure more discounts with the drop down menus next to the grid.
  2. To configure line item discounts, click on the expand symbol next to the SKU to expand the item row.
    Multiple discounts can be configured here in the same way you set the header

Calculating Header and Line Item Discounts Together

  • When there are both header and line item discounts applied, the header discounts are calculated first and the item line discount afterwards.
  • Simple discounts are first added together no matter where they are placed in the grid, while compound discounts are applied according to their order in the grid. When one compound discount is a dollar amount and the other a percentage, it’s critical that they be placed in the correct order. You can rearrange the order of discounts by selecting the discount and dragging it to another row in the grid.

PO Totals with Discounts

  • Vendor discounts are usually dealt with as rebates, where the vendor issues a quarterly rebate check for the total value of the discounts. Therefore, by default, the total of the multi discounts will be shown on the grid, but will not be reflected in the grand total of the purchase order. However, you can consider the multi discounts in the PO Grand Total by navigating Company Settings > Toolbox > Vendors > Select Vendor > General Information, and enable the setting PO Multi discount treat as discount.
  • Regardless of whether multi-discounts are treated as a rebate or as a discount, multi discounts will be factored into the cost of the individual items to ensure an accurate profit and loss report.

Was this article helpful?

Related Articles