City Electric Supply and 2% Discount

[kwired]

All of the wholesale electrical suppliers in my area that I deal with base the Cash Discount percentage on the amount they get from the vendors.

If Square D gives them a 2% discount they offer me a 2% discount if I pay by the 10th.
If Siemens gives them a 1% discount then I get 1%
If they don't get any discount I don't get any.

All discounts are based on the before tax amount.

Not saying that doesn't happen that way but say they invoice you Square D equipment early in month. How do they know if you are going to pay them before the 10th? And if you do pay before 10th, do they send you a re-written invoice reflecting actual amounts paid?

Most vendors I ever dealt with is just a straight discount on amount owed, no invoice adjustments necessary to justify the change in amount paid over the amount on the invoice. May or may not have the discount added to the next month statement as a credit item though, but in general is just a reduction to your balance and is an expense to their accounting methods.

I do it the same way if offering one of my customers a discount after the invoice has been created. The other option is to void or adjust the original invoice and enter a new one with new values on it, good business practice is not to delete or edit an invoice - other then maybe during a short period after initial creation - instead you leave those transactions as is and offer credit memos if you want to lower an amount owed.

 

[curt swartz]

Not saying that doesn't happen that way but say they invoice you Square D equipment early in month. How do they know if you are going to pay them before the 10th? And if you do pay before 10th, do they send you a re-written invoice reflecting actual amounts paid?

Most vendors I ever dealt with is just a straight discount on amount owed, no invoice adjustments necessary to justify the change in amount paid over the amount on the invoice. May or may not have the discount added to the next month statement as a credit item though, but in general is just a reduction to your balance and is an expense to their accounting methods.

I do it the same way if offering one of my customers a discount after the invoice has been created. The other option is to void or adjust the original invoice and enter a new one with new values on it, good business practice is not to delete or edit an invoice - other then maybe during a short period after initial creation - instead you leave those transactions as is and offer credit memos if you want to lower an amount owed.

They don't know when I'm going to pay it. Each invoice lists the amount of cash discount if paid by the 10th. If I pay by the 10th, which I always do, I deduct the discount.
I deal with many suppliers but my primary ones are IES (Sonepar), CED, Graybar and Edges (formally Electrical Distributors) and they all do the discounts the same way.

 

[kwired]

They don't know when I'm going to pay it. Each invoice lists the amount of cash discount if paid by the 10th. If I pay by the 10th, which I always do, I deduct the discount.
I deal with many suppliers but my primary ones are IES (Sonepar), CED, Graybar and Edges (formally Electrical Distributors) and they all do the discounts the same way.

So do you deduct 2% of the total of the invoice, the total of specific items, the taxable total....?

Maybe if they have a discount available for Square D but nothing else - then it is understandable they may not put anything else on a particular invoice to keep it somewhat simpler. Otherwise in general most that pay by discount date get a 2% across the board discount and apply it to all invoices for the month, instead of going through every invoice and calculating what discount may or may not apply, and just how much applies per invoice.

If I am getting a discount for a Square D order - it is for a quoted job order - and that price is the price once invoiced. If I pay before any discount date by the supplier it is less money in their pocket, if I pay late - they can throw on late payment fees if they wish, the invoice remains the same amount regardless, and the discount or late payment fee is a separate transaction.

 

[Dennis Alwon]

I use CES and also get the 2% off when paid by the 10th. Funny I had an account there for a long time before I found out they offered the discount. There is nothing on neither the invoice or statement that says anything about the 2%. But to answer your question, I never really gave it any thought as to the 2% being on the total amount including tax.

I did notice something else. If you return something they automatically take the 2% off of the credit they give you. I was just looking for an item that I returned and noticed it wasn't on the statement. It must have missed the cut-off date for that month. Anyway, when I received the "official" credit memo I noticed it wasn't the same price that I was charged on the invoice. I was about to put it in my folder and take it with me to ask them. But I started looking back at past credits and they were all less than the invoice. So I tried the numbers out and sure enough 2% was the difference between the credit and invoice.

It is not on the invoice. actually called them and they said just multiply by 98%. Yes they do take 2% off the returned item if that item was already paid for.

 

[kwired]

I use CES and also get the 2% off when paid by the 10th. Funny I had an account there for a long time before I found out they offered the discount. There is nothing on neither the invoice or statement that says anything about the 2%. But to answer your question, I never really gave it any thought as to the 2% being on the total amount including tax.

I did notice something else. If you return something they automatically take the 2% off of the credit they give you. I was just looking for an item that I returned and noticed it wasn't on the statement. It must have missed the cut-off date for that month. Anyway, when I received the "official" credit memo I noticed it wasn't the same price that I was charged on the invoice. I was about to put it in my folder and take it with me to ask them. But I started looking back at past credits and they were all less than the invoice. So I tried the numbers out and sure enough 2% was the difference between the credit and invoice.

Again up to store discretion - but in general most do not want to credit you for more then you actually paid for an item - if you can't produce a receipt telling them what was paid often is policy to give last sale price, or even charge a restocking fee that helps them cover some loss in this area.

Just yesterday the wife wanted to return a shirt to JC Penney's. Did not have original receipt - they only wanted to give her $24 on a shirt that had a $40 price tag on it - mostly because they couldn't verify if she actually paid the $40. They did take her credit card and was able to check for past transactions against that card - and found it - she ended up getting something like $38 - which was better for her then $24, and indicates she must have originally gotten it at a reduced price.

 

[curt swartz]

So do you deduct 2% of the total of the invoice, the total of specific items, the taxable total....?

Maybe if they have a discount available for Square D but nothing else - then it is understandable they may not put anything else on a particular invoice to keep it somewhat simpler. Otherwise in general most that pay by discount date get a 2% across the board discount and apply it to all invoices for the month, instead of going through every invoice and calculating what discount may or may not apply, and just how much applies per invoice.

If I am getting a discount for a Square D order - it is for a quoted job order - and that price is the price once invoiced. If I pay before any discount date by the supplier it is less money in their pocket, if I pay late - they can throw on late payment fees if they wish, the invoice remains the same amount regardless, and the discount or late payment fee is a separate transaction.

I never deduct a percentage. There is a total discount amount listed on the bottom of every invoice. This dollar amount is calculated by the supplier based on the discount they get. I will try to post a copy of an invoice later.

 

[Dennis Alwon]

I never deduct a percentage. There is a total discount amount listed on the bottom of every invoice. This dollar amount is calculated by the supplier based on the discount they get. I will try to post a copy of an invoice later.

One of my suppliers does that but CES does nothing. I assumed they didn't have the 2% but my supplier said they did so I called their main office and they told me to just pay 98%

 

[curt swartz]

Here is an example of what all of my suppliers that offer cash discounts do. Some of them stopped listing the discount percentages next to each line item but still calculate the discount the same way.

Ignore the high prices. I don't do much business with this CED branch. I picked this invoice because it was the easiest to post.

 

[Dennis Alwon]

Here is an example of what all of my suppliers that offer cash discounts do. Some of them stopped listing the discount percentages next to each line item but still calculate the discount the same way.

Ignore the high prices. I don't do much business with this CED branch. I picked this invoice because it was the easiest to post.

They take the discount out before the tax the same as my main supplier. Some take it before and some take it after

 

[Smart $]

They take the discount out before the tax the same as my main supplier. Some take it before and some take it after

If discount is a percentage rate, it doesn't matter whether it is before or after (other than the not more than a penny difference per sale I mentioned earlier).

If "discount" is a fixed dollar amount, that would make more of a difference. But for a retailer to not proportion such "discount" into sales and sales tax would be illegal... at least it would be here, perhaps not in other places.

 

[Dennis Alwon]

Smart

My bill at Hunt Electric was 4340.35

If I did my discount as CES would do I would take 98%

4340.35 x .98 = 4253.54-- This is what I pay supplier #1

4340.35- 4253.54 = 86.81


My Hunt Electric supplier took out the tax then gave the 2%

4340.35 / 1.075 = 4037.53

4037.53 * .02 = 80.75-- this is what they actually discounted me also. That discount (80.75) is then deducted from 4340.35

4340.35- 80.75 = 4259.60 -- This is what I paid supplier #2

So in the first case I would get a larger discount then my second scenario by $6.06

 

[Dennis Alwon]

BTW, I saw that George made me an infracted moderator-- I know it's been there awhile-- it's starting to grow on me..

 

[Little Bill]

It is not on the invoice. actually called them and they said just multiply by 98%. Yes they do take 2% off the returned item if that item was already paid for.

It doesn't have to have been paid for. When I buy something or return something, they just give me a copy of the invoice. Bought items prices are on the invoice but return items are not. A few days later I will get another copy mailed to me by CES main office. If it was a return the 2% has already been taken off even though the statement has not been sent out yet nor is it due yet.

I'm just assuming that maybe they look at who pays on time every month and figure since they are getting the 2% off the final anyway, it evens out to only credit the price less the 2%.

BTW, I only found out they offered the 2% when I paid at the store for the first time. I had been mailing it in and never saw a discount. After I found out about the 2% I made it a point to always pay at the store before the 10th!

 

[Smart $]

Smart

My bill at Hunt Electric was 4340.35

If I did my discount as CES would do I would take 98%

4340.35 x .98 = 4253.54-- This is what I pay supplier #1

4340.35- 4253.54 = 86.81


My Hunt Electric supplier took out the tax then gave the 2%

4340.35 / 1.075 = 4037.53

4037.53 * .02 = 80.75-- this is what they actually discounted me also. That discount (80.75) is then deducted from 4340.35

4340.35- 80.75 = 4259.60 -- This is what I paid supplier #2

So in the first case I would get a larger discount then my second scenario by $6.06

Kind of confusing which supplier is doing what there, but whichever one is charging the extra $6.06 may be illegally overtaxing you that $6.06 around here. In Ohio it depends on whether that is a manufacturer rebate, or a retailer discount. Full price sales tax is legal on the former, illegal on the latter. You'll have to determine which it is, and then refer to your state's sales tax law...

Below is how it goes [in Ohio] for retailer discount:

Total @ 2% discount = sale subtotal @ 2% discount + tax on discounted amount @ 7.5%
4340.35 ? 98% = 4340.35 ? 1.075 ? 98% + (4340.35 ? 1.075 ? 98%) ? 7.5%

FWIW, in Ohio as a contractor (I am not currently but have been), I would be exempt from paying sales tax on installation materials that will become tangible property of another party.

 

[Dennis Alwon]

The way I see it is that the first method is giving me 2% of the state tax. They either have to make that up or they change the invoice to fit.

 

[Smart $]

The way I see it is that the first method is giving me 2% of the state tax. They either have to make that up or they change the invoice to fit.

Not sure which 'first method' you are referring to.

2% discount on taxed total is fine for retail discount. They are not giving you 2% of the sales tax, but rather reducing the sales tax by the same 2% that the sale price is being reduced.

2% reduction in sale price and paying full-price sales tax is fine where the 2% reduction is a manufacturer discount [in Ohio].

 

[Dennis Alwon]

The first method is where the supplier just says to multiply the total bill by .98. The second method is where the supplier takes out the tax and then multiplies by .98 then adds the total tax back in

 

[Smart $]

The first method is where the supplier just says to multiply the total bill by .98. The second method is where the supplier takes out the tax and then multiplies by .98 then adds the total tax back in

The first method would be correct for retailer discount.

The second method would be correct for manufacturer discount.

[...in Ohio.]