Trade discount
In Arabic الخصم التجاري
A trade discount is a reduction from the list price given to a business customer, usually as a percentage, and shown on the invoice before tax is worked out.
In plain words
Trade discounts reward customers for buying in volume, for their channel or simply to win the account. They are agreed before the sale and appear on the invoice, unlike a settlement discount that depends on paying early.
Because the discount comes off the price before VAT, the tax is worked out on the discounted amount. The sale is booked at the net figure, so the discount does not usually appear as a separate expense in the books.
The common mistake is letting discounts be given without limits. Each rep gives a little more to close the sale, and the business finds out what it gave away only when margins fall.
- 40 cartons at SAR 10.00
- SAR 400.00
- Trade discount 5%
- SAR 20.00
- Net
- SAR 380.00
- VAT 15% on the net
- SAR 57.00
- Invoice total
- SAR 437.00
In Axon Suite
How Axon Suite handles it
In Axon Suite you decide on each rep’s profile whether they may give a discount and their maximum percentage, and every order and invoice from the rep app is held to it on the server, on each line and on the whole document.
Feature
A discount ceiling for every rep
On each rep’s profile you decide whether they may give a discount and, if so, their maximum percentage. Every order and invoice from the rep app is held to it on the server, on the line and on the whole document.
Open: A discount ceiling for every rep