Invoice With a Discount in South Africa
An invoice with a discount is a document that the seller sends to the customer to request payment for delivery of goods or services performed. As the name suggests, this type of invoice contains a discount, which reduces the amount payable.
Usually, a discount is given to the customer as an incentive to achieve the following purposes:
- It encourages customers to make prompt payment for the goods delivered or services performed, (cash/early payment discount).
- It encourages customers to buy a large quantity of goods and services, which is known as a sales volume discount.
How to Apply Discounts on an Invoice
In practice, two methods are used to apply discounts on invoices, which will now be discussed:
Percentage discount
The discount percentage is applied to the total invoice amount. For example, if the invoice total is R20,000 and the discount rate is 20%, then the discount is calculated as R4,000 (R20,000 x 20%). In the next step, the discount is deducted from the total invoice amount, as R16,000 (R20,000 - R4,000). This then results in a calculated amount of R16,000 which is the amount requested from the customer on the invoice.
Direct amount discount
A direct amount discount is when a fixed or specific amount is reduced from the sales invoice. So, if the customer is given a R500 discount and the total invoice amount is R5,000, then R500 is simply deducted from the total. In this case, R500 is deducted from R5,000, so R4,500 (R5,000 - R500) is invoiced to the customer.
How to Create an Invoice with Discount
Method 1: Use our simple invoice software
Method 2: Download a free invoice with discount template:
Conclusion
An invoice is a document requesting payment from the customer for goods delivered or services performed. An invoice with a discount is the same principle but with the added feature that it includes a discount. This discount is given to encourage customers to make prompt payment, or to buy goods or services in a larger quantity.
There are two methods to apply a discount on an invoice. One is the percentage method, where a certain percentage, such as 10% of the total invoice is reduced from the total invoice amount. The second is the direct amount method where a specific amount such as R500 is deducted from the invoice total.
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