By offering fair discounts, companies can attract more customers, increase customer loyalty, avoid overstocking, and more. 

In FirstBIT ERP, you can configure and use the following two types of trade discounts: 

• Manual discounts
• Automatic discounts

If both types of discounts are enabled, discounts of both type may be applied. For more information on each type of discounts, refer to respective sections below.

Using Manual Discounts

This functionality is available only if the Enable Discounts and Markups in Sales Documents option is selected on the Administration > Settings > Sales form. 

On the same form, you also need to choose the discount application method from the following two options:

• Apply Discounts to Amounts: To apply discounts to line amounts.
• Apply Discounts to Prices: To apply discounts to item prices.

With manual discounts enabled in FirstBIT ERP, the sales documents such as quotations, customer orders, and invoices will have appropriate fields (columns) for manual discounts: Discount,% and Discount or Discount Price.

The users can add manual discounts for any line either by specifying the discount amount (price) or discount percent. Also, the users can apply the discount to all lines if they select the discount type for the document in the Prices and Currency dialog box which can be invoked from the Main tab of the sales document. 

For some customers, you can set the default values of manual discounts. For this, you need to create discount types by using the Sales > See Also > Discounts and Markup Types form. 

For each discount type, you specify a percent of discount or markup (extra charge). A positive value set as as discount percent will be used as a discount – will decrease the amount or price depending on the settings; while a negative percent value will be considered as markup (extra charge) and will increase the amount or price. For details, see Adding a Discount or Markup Type. 

Then, in customer contracts you can specify the discount and markup types to provide default discounts or markups in sales documents. Default discounts appear in sales documents unconditionally. The users can review the default discounts is sales documents, remove them, or manually specify the discounts or markups either as percentages or amounts.

Accounting Options

In FirstBIT ERP, for each entity you can choose whether you want to record the applied discounts to dedicated GL accounts. To record discounts for a particular entity, on select the entity on the Accounting > Master Data > Entities form, and on the Accounting Parameter tab select the Create GL Entries for Trade Discounts option. Then, on posting sales documents with applied discounts, the system will generate discount-related entries for the entity.

Configuring Automatic Discounts

This functionality is available only if the Enable Automatic Discounts and Markups option is selected on the Administration > Settings > Sales form. 

Note. Automatic discounts are applied always to amounts, not prices. 

On the same form, you can also choose whether to select the Recalculate Automatic Discounts When Line is Changing option. With this option selected, automatic discounts will be recalculated on any changes occurred in a sales document. 

Before using, you must configure the automatic discount conditions by using the Sales > Service Tools > Automatic Discount Conditions form and automatic discounts by using the Sales > Service Tools > Automatic Discounts and Markups form. 

An automatic discount can be set as a percentage or flat amount in a specified currency. 

Note. If the discount will be applied to a document in another currency, the discount amount will be recalculated and applied in the currency of this document. 

Scope of discount application is defined by the following options:

• In Document: To make the discount applicable to the entire document, all listed items.
• In Document (Per Item): Only to a specific item in the document (the same item may be listed with different lot or serial numbers, with different characteristics).
• In Line: To a single line in the document.

Along with other automatic discount parameters and conditions, you can specify requirements to time of the sales (document), discount validity period, restrictions on warehouses of the sales and companies which are buying the items. For details, refer to Creating the Automatic Discount Conditions. 

Creating Discount Conditions 

Any automatic discount will be applied to a sales document only if the document matches conditions defined for the discount. Automatic discount conditions can be created separately from discounts or in the process of creating discounts. The same discount conditions can be used for multiple automatic discounts. 

There are two types of conditions:

• For Kit Sales: Discount condition specifies a kit which is defined as a list of items with their quantities. Discount is applied to document if the document includes one or more kits; discount is calculated on per kit basis.

• For Single Sales Volume: Discount condition specifies the quantity of items or document (line) amount which is calculated on listed items and groups of items; if no items, groups are listed, the quantity or amount is calculated on all items in document.

Selecting the Rule of Multiple Discount Application 

You can use multiple automatic discounts at any time. All the automatic discounts listed on the Sales > Service Tools > Automatic Discounts and Markups form with selected check boxes in the Active column are considered the discounts currently in effect. 

For a case when multiple discounts are applicable to a document (all the conditions are met), you can select the rule for discount application from the following options (presented on the form as buttons in the upper row of the form toolbar):

• Addition: (The default rule) All the applicable discounts must be applied independently.
• Maximum: Among applicable discounts, the discount with maximum resulting discount amount must be applied.
• Minimum: Among applicable discounts, only the discount with minimum resulting discount amount must be applied.
• Successive Usage: The applicable discounts must be applied successively starting with the discount with the highest priority (lowest order value). Note. "0" indicates the highest priority.
• Exclusion: Only the discount with the highest priority must be applied.

Let us consider a simple example of the rule application.

For an invoice with total amount 10000 AED, the listed discounts will be applied according to the rule as follows:

The automatic discounts can be arranged as a hierarchy structure by using groups of discounts. For each discount in a group you should specify the priority, and the rule of their application – for the group. Also, for a group, you should specify the priority (order) because the group could be listed among other discount and groups. 

Using Automatic Discounts

If the functionality of automatic discounts is enabled, the sales documents such as quotations, customer orders and invoices will have appropriate fields (columns) for automatic discounts. The percents and amounts of applied automatic discounts are read-only. To view information about manual and automatic discounts applied to a specific line, double-click in the Auto-Discount % or Auto-Discount column to open the Applied Discounts (Markups) for the Row dialog box. In this dialog box, you can view the amount of manual and automatic discounts applied to the line and which of the available auto-discounts were applied and which were not. 

With the Recalculate Automatic Discounts When Line is Changing option selected on the Administration > Settings > Sales, discounts will be automatically recalculated on any changes occurred in a sales document. 
If the Recalculate Automatic Discounts When Line is Changing option is not selected, the users will need to click the  button on the toolbar to initiate re-application of automatic discounts. The red color of circular arrows on the button indicates that the document has been changed and discount re-application is required. The green color of the arrows indicate that auto-discounts are updated. 
VAT is applied to the resulting amounts (after all discounts or markups have been applied). 

For any discount or group of discounts that must not be used anymore, clear the Active check box on the Sales > Service Tools > Automatic Discounts and Markups form.