Everything about Cash Discounts in Odoo You Need to Know
The term Cash Discounts refers to rewards given by a seller to a buyer in exchange for paying a bill in full before the due date. In the case of a cash discount, the seller often reduces the total that the buyer owes by a small percentage or a predetermined amount.
It is essential to ensure that your businesses will see repeat business. But for those who are unfamiliar with accounting software, it can take a lot of time to learn and configure the feature.
Because of this, we will cover Everything about cash discounts in Odoo you need to know in this particular tutorial. And everything will be ready to go in just 3 easy steps!
Table of Contents
- Why do you need to have cash discounts?
- Everything about cash discounts in Odoo you need to know
Why do you need to have cash discounts?
There are a number of ways to improve the relationship between your clients and your business, in addition to offering excellent services and selling high-quality goods.
One benefit of allowing cash discounts is that it enhances the possibility that a buyer will make an early payment, enabling the seller to get money more quickly. An excellent objective for any corporation is to get the money sooner rather than later so the seller can reinvest the money in the business more swiftly.
Cash discounts may also enable a business to retain more of its sales and earnings. Smart firms properly analyze their clients before offering them significant amounts of credit. However, there is always a chance that a buyer will declare bankruptcy or move away. Businesses commonly need to write off bad debts. If the company receives a cash discount, it may mean that it only gets 99 or 98 percent of the sale price, but it may also mean that it makes more money overall.
Everything about cash discounts in Odoo you need to know
The reasons above are why we highly suggest that every business should offer the option of cash discounts, mainly because it helps a lot with engaging the customers. Now, let’s move on to the 3 steps of implementing this feature!
Step 1. Offer cash discounts to customers
Firstly, we will start offering discounts to your clients. A very efficient way to do so is to add it to their invoice. This process is actually pretty simple, as it can also be a part of the creation of an invoice. So, let’s start with creating a new invoice for this tutorial. Simply select the Invoice option under the Customer tab and click the Create button to create an invoice. Until you opt to have an invoice finalized, every new listing for an invoice will be marked as Drafted.
Now, we can begin filling in the fields below:
- Customer: The name of the person to whom an invoice for the purchase will be issued. Additionally, it requires their detailed billing address as well.
- Payment Term: For this field, enter the designated cash discount that you want to offer to the customer. As you can see, it is filled with
30 days, 2% cash discountin the image above.
- Invoice Date: Indicate the date of the invoice in this field.
- Salesperson: Enter the name of the person in charge of this customer in this field.
- Sales Team: Input the team in charge of this order in this field.
From this part, you can work on completing the invoice as usual. Odoo will automatically divide the account receivables portion of the journal entry into two installments with distinct due dates once the invoice has been approved. Your payment controls will be made easier because the discounted price has already been determined. As you can see, the two installments have different due dates: 98% within 5 days, 2% within 30 days.
Step 2. Grant cash discount to orders
When you choose to include this cash discount offer, there are two scenarios that might happen. One, the customer will complete the payment on time; hence they will be able to experience the discount benefits. This step is for when the customer meets the payment deadline.
You will need to complete the fields below:
- Account: For this field, choose the appropriate account dedicated to the cash discount feature.
- Tax: Choose the right percentage of tax from the drop-down menu.
- Label: Since this can help you differentiate from various journal entries, we think you should be specific when naming this entry.
- Amount: This will be the amount of money equal to the discount percentage.
You will match the payment (98%) with the relevant line in the journal entry when processing the bank statement. As seen in the screenshot up top, in addition to the customer, you can also see how much money, or 2% of three dollars, is left. If the buyer paid within the allotted five days and you wish to accept the cash discount, you can click on this line with 2%, pick Open Balance, and then choose your Cash Discount reconciliation model. To reconcile, choose the remaining cash discount and click Create Write-off. The invoice will then be marked as fully paid.
In order to streamline the procedure, you can also develop a specific reconciliation model. A tax depending on the taxes levied on your invoices should be included in the model in this situation. As a result, if you manage different tax rates, you must develop various reconciliation models. Be aware that you might already have a Cash Discount model accessible by default, depending on your localization.
Step 3. Set up full payments
Another scenario is that the customer does not meet the required deadline when it comes to paying you. In that case, we will be showing you how to reconcile your payment, where the customer will have to pay the full amount of money without any benefit.
Since there is no division between the two sums of money, You will reconcile the payment (in full) with the invoice’s two lines (98% and 2%). To match the two lines with the payment, simply click on them. When you are all good to move on, simply click the Reconcile button to tie everything together.
Cash discounts are essential if you want to make sure that your business has repeat customers. However, it could take some time for people who are not familiar with accounting software to comprehend and use the capability.
With the help of the method we just demonstrated, you may utilize any kind of discount operations traditionally and conventionally, which is advantageous for the operations of the business both now and in the future.
This concludes our guide on Everything about cash discounts in Odoo you need to know. We sincerely hope you will find it useful. You can ask for help from Odoo’s customer support if you run into any software issues.
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