Trade discount vs. cash discount in WinMentor — differences and accounting
The two types of discounts: definitions, accounting impact, how to configure them on invoices in WinMentor, and VAT implications.
Bogdan Minoiu — Founder Azuvio · 2026-05-23 · 6 min · ERP & Operations
Definitions
Trade Discount = a reduction granted on the invoice before VAT calculation. It reduces the taxable base.
Cash Discount (Early Payment Discount) = a reduction granted for early payment after the invoice has been issued. It does NOT reduce the initial VAT base (it is adjusted subsequently).
Trade Discount — in WinMentor
On the invoice line: use the "Discount %" or "Discount Value" fields. WinMentor recalculates: Base = Price × Quantity × (1 - Discount%), VAT = Base × 19%.
Example: 100 units × 10 EUR = 1,000 EUR. Trade discount 10% → Base 900 EUR. VAT 171 EUR. Total invoice 1,071 EUR.
Accounting: 4111 = 707 (900) + 4427 (171). The discount is not recorded separately.
Cash Discount — in WinMentor
Granted subsequently upon early settlement. Separate document: credit note or partial reversal invoice.
Example: 1,000 EUR invoice issued with 30-day terms. The client pays within 10 days → receives a 2% cash discount = 20 EUR.
Accounting: 667 "Expenses with discounts granted" = 4111 "Trade receivables" (20 EUR). VAT is adjusted only if a partial reversal invoice is issued for the reduction.
E-invoicing and Tax Authority Impact
Trade Discount: The e-invoice reports it as a "discount" on the line item. The taxable base is already reduced.
Cash Discount: Requires a separate credit note/partial reversal invoice with the reason "Cash discount".
Common Mistake
Confusing the two — operators apply a "trade discount" to a previously issued invoice instead of processing a cash discount. Result: incorrect VAT base, need for e-invoice resubmission, and potential fines from ANAF (the Romanian tax authority).
Conclusion
The rule: before issuance → trade discount. After issuance → cash discount. WinMentor manages both correctly if you select the appropriate document type.