Invoice With a Discount in New Zealand
An invoice with a discount is a document that the seller sends to the customer to request payment for delivery of goods or services performed. As the name suggests, this type of invoice contains a discount, which reduces the amount payable.
Usually, a discount is given to the customer as an incentive to achieve the following purposes:
- It encourages customers to make prompt payment for the goods delivered or services performed, (cash/early payment discount).
- It encourages customers to buy a large quantity of goods and services, which is known as a sales volume discount.
How to Apply Discounts on an Invoice
In practice, two methods are used to apply discounts on invoices, which will now be discussed:
Percentage discount
The discount percentage is applied to the total invoice amount. For example, if the invoice total is NZ$2,000 and the discount rate is 20%, then the discount is calculated as NZ$400 (NZ$2,000 x 20%). In the next step, the discount is deducted from the total invoice amount, as NZ$1,600 (NZ$2,000 - NZ$400). This then results in a calculated amount of NZ$1,600 which is the amount requested from the customer on the invoice.
Direct amount discount
A direct amount discount is when a fixed or specific amount is reduced from the sales invoice. So, if the customer is given a NZ$50 discount and the total invoice amount is NZ$500, then NZ$50 is simply deducted from the total. In this case, NZ$50 is deducted from NZ$500, so NZ$450 (NZ$500 - NZ$50) is invoiced to the customer.
How to Create an Invoice with Discount
Method 1: Use our simple invoice software
Method 2: Download a free invoice with discount template:
Conclusion
An invoice is a document requesting payment from the customer for goods delivered or services performed. An invoice with a discount is the same principle but with the added feature that it includes a discount. This discount is given to encourage customers to make prompt payment, or to buy goods or services in a larger quantity.
There are two methods to apply a discount on an invoice. One is the percentage method, where a certain percentage, such as 10% of the total invoice is reduced from the total invoice amount. The second is the direct amount method where a specific amount such as NZ$50 is deducted from the invoice total.
Invoicing tools for New Zealand: