Three worked examples from the 2015 transition
These examples preserve the prompt payment discount (PPD) workflows advised for Pegasus Opera 3 and Opera II following the 1 April 2015 change. They show how a discount, payment and credit note were brought together in the Sales or Purchase Ledger.
Each example uses an invoice for £120: £100 goods plus £20 VAT. The settlement terms offer 10% discount within 30 days, or 5% within 60 days. Payment after 25 days qualifies for the 10% discount in the illustration.
| Amount in each 10% discount example | Goods | VAT | Total |
|---|---|---|---|
| Original invoice | £100 | £20 | £120 |
| Discount and VAT adjustment | £10 | £2 | £12 |
| Receipt or payment | £90 | £18 | £108 |
The figures and menu commands below belong to the original 2015 guidance, rather than instructions for every current software version or tax situation.
Example 1: a customer takes the settlement discount
Sales Ledger and SOP/Invoicing workflow
- On 1 April 2015, the customer buys goods for £120 (£100 goods plus £20 VAT). Print the invoice using the new PEG630 invoice design, which displays the settlement terms and VAT adjustment information.
- The customer pays 25 days later, taking the 10% discount.
- Post the £108 receipt (£90 goods plus £18 VAT) on account.
- Post a credit note through SOP/Invoicing for £10 goods plus £2 VAT.
- Allocate the original invoice to the receipt and credit note.
- Send the month-end statement using the new PEG610 design.
Recording the adjustment
The invoice’s VAT calculation initially ignores the discount. The credit note then records the discount and VAT reduction. The original flowchart illustrated these VAT Return figures:
| VAT Return box | Original invoice | After the credit note |
|---|---|---|
| Box 1 | £20.00 | £18.00 |
| Box 5 | £20.00 | £18.00 |
| Box 6 | £100.00 | £90.00 |
The second reference in the Sales Ledger, or customer reference in SOP, could record the settlement discount reference and relevant invoice number. An analysis code set up for discounts could be used to analyse the credit. Credit notes could also be emailed to customers.
The SQININSD invoice design printed the adjustment information on PEG630 stationery. Businesses using customised stationery were advised to add the equivalent wording. The PEG610 UK and foreign settlement-discount statement layouts also included the discount reference.
A limitation noted in the original guidance was that allocation drill-down was unavailable from the Zoom function after allocation where receipts had been posted on account.
Example 2: a supplier issues an adjusting credit note
Purchase Ledger workflow
- On 1 April 2015, buy goods for £120 (£100 goods plus £20 VAT), with the same 10% and 5% settlement terms.
- After 25 days, use the Suggested Payments Report to identify invoices due for payment and still within their discount period.
- Use Processing → Payments to pay the invoice within the 10% discount period.
- Post the £108 payment (£90 goods plus £18 VAT) on account, and put the invoice on hold.
- When the supplier issues its adjusting credit note, post it for £10 goods plus £2 VAT.
- Take the invoice off hold and allocate it to the payment and credit note.
Holding the invoice while awaiting the supplier’s credit note prevented it from being allocated to another payment. The guidance required the payment to be processed manually: Authorise Cheques and Authorise BACS were not available for these discount invoices.
Recording the supplier reference
The second reference in the Purchase Ledger, or supplier reference in the Purchase Invoice Register, could record the settlement discount reference and relevant invoice number. An analysis code set up for discounts could be used to analyse the credit.
The original flowchart illustrated these VAT Return figures for the purchase:
| VAT Return box | Original invoice | After the credit note |
|---|---|---|
| Box 4 | £20.00 | £18.00 |
| Box 5 | −£20.00 | −£18.00 |
| Box 7 | £100.00 | £90.00 |
Example 3: a supplier does not issue a credit note
Posting the adjustment in Opera
- On 1 April 2015, buy goods for £120 (£100 goods plus £20 VAT), with the same settlement terms.
- After 25 days, check the Suggested Payments Report for invoices that need paying within their discount period.
- Pay using Processing → Payments, taking the 10% discount.
- Post the £108 payment (£90 goods plus £18 VAT) on account. The original written example also advised putting the invoice on hold while completing the adjustment.
- Post an adjusting credit note in Opera for £10 goods plus £2 VAT, using the confirmed adjustment information and appropriate supplier reference.
- Take the invoice off hold if applicable, then allocate the invoice to the payment and credit note.
The original example also referred to sending a month-end statement using the PEG610 design. PEG610 is the customer statement design described in the sales example; that reference is retained as context from the publication rather than a required step in this supplier-payment workflow.
As in example 2, use the Purchase Ledger’s second reference or PIR supplier reference to identify the discount and invoice, and an appropriate analysis code for the credit. The purchase VAT Return illustration is the same: Box 4 reduces from £20 to £18, Box 5 from −£20 to −£18, and Box 7 from £100 to £90.
Help with your Opera transactions
For advice on discount processing, credit-note allocation or the document layouts in your installed software, speak to our Opera support team. We can help your team review its process against the version it uses today.
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