Preventing Tax Rounding Discrepancies by using Discount Items
Discrepancies caused by rounding differences can occur when tax is applied to the transaction total in NetSuite Point of Sale (NSPOS), but calculated against line items in NetSuite ERP. The invoiced amount shown in NetSuite ERP can be different by a small fraction (approximately $0.01) from the amount received at the register in NSPOS.
NSPOS includes a script that in most instances will resolve these errors. The script uses posting and nonposting Discount Items in NetSuite to automatically adjust tax-rounding discrepancies. When a rounding discrepancy causes an invoice in NetSuite to be higher or lower than the payment received, the script adjusts the invoice amount up or down to match the payment. This adjustment allows NetSuite ERP to show the invoice as closed (paid in full).
For example, if a payment was received at $10.64, but tax-rounding discrepancies caused the invoice to show $10.65, the invoice is adjusted down by -0.01 to $10.64.
Each Discount Item includes a Rate that limits the adjustment amount allowed. A common limit is 0.05, but your Accounting department must determine what limit is acceptable for your business processes. If an invoice discrepancy is more than the limit, the discrepancy must be handled manually in NetSuite ERP.
To implement the script, you must:
A. Determine the adjustment limit Rate. For example, adjust by 0.05 or less.
B. Set up two Discount Items:
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Posting rounding difference
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Nonposting rounding difference
To set up Discount Items to adjust tax-rounding discrepancies:
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Log in to NetSuite as an administrator.
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Go to Lists > Accounting > Items > New.
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Under Item Type, click Discount.
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For Item Name/Number, enter Posting rounding difference.
The item name must match exactly, including upper and lower case.
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For Rate, enter the adjustment limit. For example, 0.05.
This is the maximum an invoice can be adjusted up or down. Do not enter a currency symbol.
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Click Save.
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Repeat using the Item Name/Number of Nonposting rounding difference.
Please note that this script does not cover every scenario. For example, rounding discrepancies can still occur when an item is returned/exchanged for a different item and the price difference creates a refund to the customer. Discrepancies can occur for transactions at locations that include taxes in each item’s price. Either of these situations may require manual adjustment to eliminate differences between the two connected systems.
Considerations for Returns after Tax Adjustments to Discounts
Usually the tax rate applied to a discount will be the same as the tax rate applied to the items sold. However, an administrator can make adjustments to tax rates associated with different parts of a transaction.
If a shopper returns an item purchased at a discount, and the tax for the discount was changed after the purchase, the refund amount will show the original taxes paid. This variance from the original and current discount tax rate could result in a difference between amounts logged for the transaction in NSPOS and the amount listed in NetSuite ERP.
Because NetSuite ERP does not prevent an administrator from making tax changes, the NetSuite customer is responsible for discrepancies in refund amounts caused by changing the tax rate applied to discounts.
The NetSuite customer is responsible for discrepancies in refund amounts caused by changing the tax rate applied to discounts.