Discounts in Sales Invoices in Tally.ERP9
In the day to day business , to increase the business volume, attract more customers, often discounts are offered. The Discount is a special allowance or concession in price of a product or service. Discounts in sales invoices can be given on products or services. Discounts in sales invoices can attract customers to buy more products, services for longer duration or on instant/early release of payments. So, Discounts in sales invoices is a deduction of product price from its base price.
The Seller deducts the Discounts in sales invoices amount from the total price, and the buyer is supposed to pay only the net amount.
There are two types of Discounts in sales invoices
Trade discount is the discount allowed by discount is a discount
Trade discount is the discount allowed by the seller to its customers at a fixed percent is on the list price of goods. You don’t need to pass separate entry for the trade discount. for example if a trader sells goods worth 10000 at 20% discount then the sales would be entered for Rs 8000 only.
This Discounts in sales invoices is allowed to the customers for making prompt payments. In other words, cash discount is allowed only if the customer makes the payment within a fixed time period, such discounts, motivate the customers to make the payment at the earliest
Discount is a nominal account and It is debited when it is allowed to a customer and credited, when it is received.
Advantages of Cash Discounts
- Cash discounts motivates debtors to pay early.
- Chances of accounts turning into bad debts get subsequently Reduced.
- Due to early receipts the trading cycle gets smaller
- It results in increased sales as new customers will be enjoy the cash discount.
Disadvantages of Cash Discounts
- Cash Discounts reduces cash inflows from debtors due to cash discounts.
- It affects the Net profits of the business .
Creating Discount Ledger
- Gateway of Tally > select Accounts Info > select ledgers > click on create to create a ledger
- Type Name as Discount Allowed > under Indirect Expenses > Inventory value affected -No
- 3. Select Type of Ledger – Not Applicable (to compute Discount amount from percentage ).
- Is GST Applicable – Not Applicable
- Include in Accessible value calculation for – GST
- Appropriate to – Goods here but services can be selected as per situation.
- Method of calculations – based on value. Accept to save.
Note : Discount can be given in percentage only not by amount .
Discounts in sales invoices of Items
Tally.ERP 9 may allow discounts to the buyers on the total amount or on each item separately
Discounts in sales invoices on total item amount
Recording your sales invoice for customers to whom you sell some goods with sales discount
- Select the type of voucher as Sales Voucher by pressing F8 key. Select the stock items in the sales invoice, after you have finished selecting items press Enter key twice to skip one line.
On the next line of the screen select the discount ledger.
- Provide details of the discount.
- Select the ledger for discount say Discount Allowed .
- Fill the discount percentage (%) under Rate with a negative number (eg, -10%). Tally.ERP 9 will apply the discount on the total item amount and shows the discount amount against the selected discount ledger.
- Select CGST and SGST ledgers to calculate the GST applicable 4. Enter the remaining details and accept the screen. Press Ctrl + A to save.
Note : you will notice the total GST is calculated after deducting the Discount from sales amount.
Discounts in sales invoices against each item – without using Discount Ledger
- Press F11 key to go to Features > set Use separate discount column in invoices? to Yes .
you will now find the Disc % column in against every items selected. As you have seen in discount in Total invoice amount minus sign was used but here you won’t need minus sign.
- In the sales invoice, after you have entered the values of Quantity and Rate , enter Disc % for the selected item.
The Amount against the values given quantity and rate is automatically get populated after deducting the discount and without showing any change in the Rate .
- Select CGST and SGST to calculate GST Tax amount.
- Enter the remaining details and accept the screen and press Ctrl + A to save.
Discount on item rates – using ledger account
- On the sales invoice screen, press F12 key (Configure) > Press F12 again for more options > set the last settings of Provide cash/trade discount? to Yes .
- After entering the Amount of the stock item, in the Discount field, enter the discount percentage for that item.
Alternatively, press Enter to leave the first field blank and enter the discount amount in the next field.
- Select the discount ledger created.
Ensure that in the discount ledger, the option Type of ledger is set to Discount .
- Press Ctrl + A to save.
You will notice total discount amount is shown against the discount ledger. This amount is the sum of the discounts displayed under each stock item.
Sales Invoice with Free Items
Sometimes to encourage more sales a business my offer some fee items to its regular buyers, So, you may give some items for free when you sales something to them. Suppose a buyer has placed an order for 20 pcs of an item, you may want to bill him for only 15 pcs and want to give him 5 pcs without any additional cost. Or, you may bill him as per his requirement and give him 5 pcs of the same item or a different one for free. In Tally.ERP 9, you can record such sales in different ways in voucher entry.
Account for free items using Actual and Billed quantities
- Select F11 key (Features) > then press F2 (Inventory) > change Use separate actual and billed quantity columns? to Yes .
which will result in the Actual and Billed columns under the Quantity column in sales invoice.
- Actual : It is the actual no of quantity sold to the customer, say 10 pcs of Shirts in this case.
- Billed : Enter quantity to be billed to the customer, say 8 pcs of the same item.
- press Ctrl + A to save.
The total amount is calculated on the basis of the billed quantity; however, the items given to the buyer is based on the actual quantity, which automatically includes the number of free items.
Sales of free items using zero-valued transaction
- Press F11 key (Features) > select F2 (Inventory) > set Enable zero-valued transactions? to Yes .
This way you can enter free stock items without entering the Rate (zero value) in every sales invoice.
- In the sales invoice, provide details of the items – Quantity , Rate as blank, and Amount – to be billed.
- Select the same item again or a different item and enter the Quantity that you want to give for free. Leave the Rate and Amount fields blank.
PS: Tally.ERP9 is a comprehensive software by Tally Solutions, Simple easy to use, It is best suited for Accounting, Inventory and Payroll management and fully complaint with Goods and Services Tax.
Different Types of Discounts in Tally.ERP9
Trade Discount– It is the discount allowed by the seller on the List price. No separate entry is posted to show trade discount.
Cash Discount – Discount allowed to the customers by the sellers to make prompt or timely payments. Cash discount entries are shown in sales invoices either under discount column or through discount ledger.
How to generate Sales Invoice of Free Items in Tally.ERP9?
1. When you are put offers like (one purchase of 2 items+get 1 free) then you can use different Actual and Billed quantity feature. Here you will write actual quantities as 3 and Billed as 2.
2. In the sales invoice write the no. of quantities but keep the rate blank. This way Zero rates value can be entered for free items.