How Discounts Are Calculated

Receivables uses different formulas to calculate discounts, depending on your setup, the payment terms on the transaction, and the type of payment received.

Receivables provides formulas for these discount events:

• Maximum Discount

• Earned Discounts and Partial Payments Allowed

• Unearned Discounts with Partial Payment Discounts Allowed

• Earned Discounts with Partial Payment Discounts Not Allowed

• Unearned Discounts and Partial Payments Not Allowed

• Discount on Lines Only

Maximum Discount

Receivables uses the following formula to determine the maximum discount amount:

Maximum Discount = (Amount Due Original) * (Highest Discount Percent - Discount Taken)

Earned Discounts and Partial Payments Allowed

If the receipt amount is greater than the remaining amount due, less the discount, Receivables uses the following formula to determine the earned discount:

Earned Discount = Amount Due Remaining * Discount Percent

If the receipt amount is either the equal to or less than the remaining amount due, less the discount, Receivables uses the following formula to determine the earned discount:

Earned Discount = (Receipt Amount * Discount Percent) / (1 - Discount Percent)

Unearned Discounts with Partial Payment Discounts Allowed

Receivables uses the following formula to determine unearned discounts if partial payments are allowed:

Unearned Discount = Maximum Discount - Earned Discount

Earned Discounts with Partial Payment Discounts Not Allowed

If the Allow discount on partial payments option on the payment terms isn't enabled, Receivables only takes earned discounts if the receipt amount closes the installment.

Receivables uses the following formula to determine earned discounts, if partial payment discounts aren't allowed and the receipt amount closes the installment:

Earned Discount = Amount Due Original * Discount Percent

Unearned Discounts and Partial Payments Not Allowed

If the Allow discount on partial payments option on the payment terms isn't enabled, Receivables only takes unearned discounts if the receipt amount closes the installment.

Receivables uses the following formula to determine unearned discounts, if partial payments aren't allowed and the receipt amount closes the installment:

Unearned Discount = (Amount Due Original) * (Maximum Discount Percent - Earned Discount)

Discount on Lines Only

If the Discount Basis field on the payment terms is set to Lines Only, Receivables doesn't take discounts on receipt amounts applied to tax, freight, or late charges. Receivables uses the following formula to determine the discount amount:

Line Percent = Discount Percent * (Sum of Lines + Sum of Line Adjustments - Sum of Line Credits) / (Amount Due Original + Sum of Adjustments - Sum of Credits)

Once you determine the discount line percent, use this as the discount percent in all of these formulas.