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Thread: How do you record discount received?

  1. #1
    Silver Member
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    Sep 2008
    Cape Town
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    How do you record discount received?

    Every year my books get slightly better. This year I want to tackle discount received...or should I?

    I have in the past just split what I have paid for stock into what I paid for it and delivery and made no note of discount received. Unfortunately when I use my pos system I just enter the invoice amount for the product, not for instance R100 less 3%, otherwise there would be quite a bit of working out. Therefore my stock value on my POS is probably a little higher than my book value – although they are treated as separate systems in my shop.

    Should I be working out individual prices or should it reflect as income? I will probably go on the new small buss tax so this is probably a moot point, but just for the record….and I plan to take my turnover above 1 mill in the next couple of years

  2. #2
    Platinum Member Marq's Avatar
    Join Date
    May 2006
    Thanked 282 Times in 215 Posts
    If your POS system is your main source of entry for your purchases then it should handle discounts received and sort out the correct entries without having to work stuff out. If its not then maybe it needs to be linked to your accounting software and records entered from the other direction.

    Recording discounts depends on whether you want to keep track of the various suppliers and what they give you in terms of discounts and special prices. It also may depend on your sales price, where margins are tight and you need to tweak every number and know what and where your business is. Some business make their margins on discounts received when selling products on. Sometimes the effort is not worth the result so one might as well stay on the capturing net numbers system.

    However if you plan to grow and take your company to new levels then perhaps you need to know these figures. Discount received is not part of your income numbers but set off in your trading account against the purchases number.
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