Invoice With a Discount in UAE
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 AED 2,000 and the discount rate is 20%, then the discount is calculated as AED 400 (AED 2,000 x 20%). In the next step, the discount is deducted from the total invoice amount, as AED 1,600 (AED 2,000 - AED 400). This then results in a calculated amount of AED 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 AED 50 discount and the total invoice amount is AED 500, then AED 50 is simply deducted from the total. In this case, AED 50 is deducted from AED 500, so AED 450 (AED 500 - AED 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 AED 50 is deducted from the invoice total.
Invoicing tools for UAE: