If you are using (Invoice Discount Amount) feature on Sales or Purchase Invoices on Microsoft Dynamics NAV, you may wonder, if you have multiple item lines with different prices, how the system distribute the discount amount on all document lines. That’s what we are going to discover in this post.

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Let’s assume first we have 1 Line item Code is “X01” and it’s Qty on Invoice equal to 1 PCS. Let’s see the STANDARD NAV In Scenario Number 1.

Scenario 1: Item Without Invoice Discount 

Item Unit Cost = 100 EGP

Unit Cost Exclude VAT = 100 EGP

VAT Percentage = 25%

VAT Amount = 25

The Total Invoice will be = 100 + (100*25%) = 125 EGP

Scenario 2: Item With Invoice Discount Amount 10 EGP

Discount Amount = 10 EGP

Unit Cost Exclude VAT = (100-10)= 90 EGP

VAT Percentage = 25%

VAT Amount = 22.5 EGP

The Total Invoice will be = 90+ (100*25%) = 112.5 EGP

You will Notice the following:

  • The Invoice Discount Amount deducted first from the direct cost of the item.
  • Tax have been calculated after the invoice discount amount applied.

Scenario 3: 2 Item Without Invoice Discount 

To accomplish this scenario, let’s assume we have the same item Code “X01” and another item “X02”. The Item Unit Cost for “X02” is = 20 EGP.

Let’s see the calculation of the total invoice as STANDARD NAV:

Sce. Item Code Discount Unit Cost Exclude VAT VAT Amount (25%) Total Invoice
3rd Sce. X01 0 100 25 125
X02 0 20 5 25
Total 0 120 30 150

Scenario 4: 2 Item With Invoice Discount Amount 10 EGP

Here we will know how the Invoice Discount Amount distributed on every line item.

Sce. Description Discount Weight Discount Unit Cost Exclude VAT VAT Amount (25%) Total Invoice
4rd Sce. X01 83.33 8.33 91.67 22.92 114.58
X02 16.67 1.67 18.33 4.58 22.92
Total 10 EGP   27.5 137.5

 

Automatically the system first will calculate the weight of every item based on Unit Cost, as shown in (Discount Weight) Column. (This column not NAV Field-Just for Understanding)

X01: (100 EGP) / (100 EGP + 20 EGP) * 100 = 83.33%

X02: (20 EGP) / (100 EGP + 20 EGP) * 100 = 16.67%

Then the Invoice Discount Amount (10 EGP) will be distributed based on this percentage as shown in (Discount) Column.

X01: 10 EGP * 83.33% = 8.33 EGP

X02: 10 EGP * 16.67% = 1.67 EGP

Hope this example help you understand the concepts of Microsoft Dynamics NAV when calculating invoice discount and the distribution of the discount for every item line.