Discounts in Odoo – it’s as simple as that

In Germany, the legal payment period for any kind of purchase is 30 days. Many companies offer discounts to speed up payment. After all, their own liquidity is at stake. Usually, discounts vary between 2 and 3%, if the price is paid within a shorter payment period. The promised price reduction encourages the customer to settle an invoice quickly. This provides advantages for both the issuer of an invoice, since he will get his money earlier, and for the recipient of the invoice, since he can save money.

Two questions remain: do you deduct the discount from the gross or the net amount? And, will my software be able to cope with all that? After all, it is not the original amount that gets paid, the difference, in other words, the discount, has to be taken into account as well. And finally, the VAT share of the discount should be corrected somehow. All this sounds pretty complicated. The answer to the first question is quite easy: a cash discount is always deducted from the gross amount. The answer to the second question is: With the correct settings, the entire process can be implemented smoothly into Odoo.

Let us look at the following example: Our customer has bought products at a net price of € 1,000. Our terms and conditions allow him to deduct a 2% discount off the gross amount for payment within 14 days. After 12 days, the customer pays € 1,166.20. The discount reduces the invoicing party’s turnover as well as the original VAT. In SKR03, the respective entry will look as follows:

In Odoo, the bank reconciliation will now look as follows:

To achieve this, the following steps have to be taken:

1) Create a new tax (by copying the existing tax for 19%) and call it “tax included in price”.

2) Create a new “Reconciliation model” for the respective bank account (this needs to be done for each bank account affected) by clicking on the button “More” in the dashboard.

Please do not hesitate to contact us if you have questions.