Purchase price Variances

[Caviarjim]

A supplier of ours is changing the way they invoice us. Up until recently they have just given us a set discounted price but they now want to invoice us a non-discounted price and we will have to claim the discount back retrospectively in the form of a discount. My question is does QB  desktop offer a price variance option when entering invoice prices? can the price difference be set aside to a separate account and cleared when the credit is recieved?

[LauraAB]

Hi Caviarjim. It can take some time to adapt to change, but QuickBooks Desktop can adapt with you. Based on what you've said, I've got a couple of suggestions.

It sounds to me like the vendor will be charging you full price and then returning the money to you afterward. If so, I recommend taking a look at this article about how to record a supplier refund as it walks you through various options. You can pick the one that works best for your company. Check in with your accountant if you're not sure.

I also recommend touching base with your accountant regarding your last question about creating a separate account and clearing it. They'll be able to let you know if that's a good way to go about this and the best steps to take to achieve it.

While QuickBooks Desktop does have price levels for items and services you're selling, these cannot be applied to your vendors and items you're purchasing.

I hope that helps. If you're in search of an accountant who's familiar with QuickBooks Desktop, use your postal code to search with our Find an Accountant tool.

Have a great day!

[Rochelley]

Is the vendor invoicing you in full on an invoice and then issuing a credit against that invoice for your discount, or are you just 'taking' the discount at payment time?  Also, is it important to you that the COGS or expense accounts that the original invoice is charged to are the same accounts you want credited when you 'receive' the discount?  If so, then you would simply enter the bills as they arrive and enter bill credits for the amount of the discounts, crediting the same accounts you originally debited.

If that is not important to you and you want to track your discounts in a separate account, create a COGS or Expense account called something like 'Purchase Discounts'.  When you short pay the invoice on the 'Pay Bills' screen, click on the button that says 'Set Discount'.  Enter the amount the invoice is being discounted by, and enter your 'Purchase Discounts' account.  You could also enter any COGS or Expense account here, if you want to. 

Either method works.  It all depends on how you want to see the information when it is all said and done.  Doing it the first way buries the discounts into your original COGS/Expense accounts and you would have to use some creative report filtering to isolate your discounts, whereas creating a separate Discount account lets you see how much the discounts immediately, without having to do any filtering.  If you only have one COGS account, your 'Purchase Discounts' account can be a sub-account of your main COGS, therefore rolling all your discounts up into the top-level account.  If you have more than one COGS account, then just set your 'Purchase Discounts' account up as a top-level COGS account.  Sorry for being long winded - hope this is helping . . . as you can see, there are several ways accomplish this.