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Should early payment discounts include freight and tax?
October 18, 2023
Q. We are currently working on an Early payment discount project. We are seeking your feedback and advice on what is the best practice of applying the discount. Is it applied to invoice gross amount including freight and tax? Or should it be applied to invoice amount excluding freight and tax?
A.
(Answered by IOFM's Senior Certification Trainer, Nicole Caley)
Typically, due to sales and use tax laws, discounts should not be applied to tax. The early pay discount does not lower the price of the…
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