FAQ: Discounts & Taxes on Purchase Orders

Q: What is the difference between a line discount and a document-level discount?
A: A line discount applies to a single item on the purchase order. A document-level discount applies to the entire order. If you have multiple items and only some get a discount, use line discounts. If the entire order qualifies for a discount, use a document-level discount.

Q: Can I apply both a line discount and a document-level discount on the same order?
A: Yes. Both discounts can be applied to the same purchase order. The line discount is subtracted first, then the document-level discount is applied to the subtotal after the line discounts.

Q: What happens if I apply a discount larger than the order total?
A: The system will typically reject a discount that exceeds the order subtotal. Verify your discount amount and ensure it does not exceed the total you are trying to discount.

Q: How do I know which tax applies to my purchase?
A: The tax depends on the type of item you are purchasing and your local jurisdiction. Ask your accountant or administrator which taxes apply to different product categories. Your company may have standard tax rates configured for common scenarios.

Q: Does the purchase order tax need to match the invoice tax?
A: Yes. The tax on the purchase order should match the tax on the vendor's invoice. If it does not, contact the vendor to clarify. Tax discrepancies can cause reconciliation issues when you match the invoice to the order.

Q: Are taxes applied before or after discounts?
A: This depends on your company's accounting policy and local tax laws. Typically, discounts are applied first (reducing the base), and then taxes are calculated on the discounted amount. Confirm with your accountant.

Q: What if the vendor offers a discount "net 30 days" (paid within 30 days)?
A: "Net 30" refers to payment terms, not the discount amount on the purchase order itself. You should still record the discount on the purchase order if the conditions are met when you place the order. Note the payment terms in the memo.

Q: Can I apply multiple taxes to a single purchase order?
A: Yes. If multiple taxes apply to the order (e.g., VAT and import duty), you can add multiple tax lines. Each tax is calculated separately and added to the total.

Q: What if I enter the wrong discount or tax and save the order?
A: If the purchase order is still in draft status, you can edit it to correct the error. Once the order is confirmed or partially received, editing may be restricted. Contact your administrator if you need to modify a finalized order.

Q: Are discounts and taxes applied differently to foreign-currency orders?
A: No, discounts and taxes are applied the same way. However, they are calculated on the order total after the exchange rate conversion to your base currency.