How to manage discounts and promotions in your invoicing

The different types of discounts and their impact on invoicing

You can apply several types of customer discounts depending on your commercial strategy. Each has a different impact on the final calculation of your invoice.

The percentage discount applies to the line amount or the invoice (example: -10%). The CHF discount deducts a fixed amount (example: -50 CHF). The cascading discount applies several successive discounts. The global discount applies to the invoice total.

Concrete example for a 1000 CHF invoice excluding VAT:

• 10% discount: 900 CHF excluding VAT + 72.90 CHF VAT (8.1%) = 972.90 CHF including VAT
• 100 CHF discount: 900 CHF excluding VAT + 72.90 CHF VAT = 972.90 CHF including VAT
• Without discount: 1000 CHF excluding VAT + 81 CHF VAT = 1081 CHF including VAT

VAT is always calculated on the net amount after discount, never on the gross amount. This rule is fundamental to remain compliant with FTA requirements.

Line discount vs global discount

The line discount applies individually to each product or service. It appears directly on the relevant line, which makes the reduction very visible to your customer.

Example: Consultation 500 CHF with 20% discount = 400 CHF net on the line.

The global discount applies to the total of all lines. It appears at the end of the invoice as a separate deduction line.

Example: Total lines 1000 CHF, global discount 10% = -100 CHF, net 900 CHF.

For accounting purposes, both methods give the same final result. The difference is mainly visual: the line discount values each service individually, whilst the global discount highlights the commercial gesture on the entire service.

Cascading discounts: beware of calculations

Cascading discounts are successive reductions that don't add up. This is a common mistake that can be costly.

Example on 1000 CHF:

• Direct 15% discount: 1000 - 150 = 850 CHF
• 10% then 5% discount: 1000 - 100 = 900, then 900 - 45 = 855 CHF

The difference? 5 CHF on this example, but on large amounts, the gap becomes significant.

The correct calculation: first discount on the initial amount, then second discount on the already reduced amount. For -10% then -5%, the actual calculation is: 1000 × 0.90 × 0.95 = 855 CHF.

This mechanism protects your margins whilst remaining transparent with your customers. Always document clearly how your discounts apply.

VAT and discounts: Swiss rules to comply with

The Federal Tax Administration (FTA) imposes clear rules: VAT is always calculated on the net amount, i.e. after deducting the discount.

Example with different rates:

• Product 1000 CHF, 10% discount = 900 CHF net, VAT 8.1% = 72.90 CHF
• Foodstuff 100 CHF, 5% discount = 95 CHF net, VAT 2.6% = 2.47 CHF
• Accommodation 500 CHF, 15% discount = 425 CHF net, VAT 3.8% = 16.15 CHF

You must keep clear documentation of your invoicing promotions: granting conditions, duration, customers concerned. These supporting documents may be requested during a VAT audit.

To learn more about VAT declaration rules, consult our guide on VAT declaration according to invoice or payment.

Mandatory information on the invoice

An invoice with a discount must comply with Swiss presentation standards to be fiscally and commercially valid.

Mandatory information:

• Gross amount (price before discount)
• Discount clearly identified (in % or CHF)
• Net amount (after discount)
• VAT calculated on the net amount
• Final total including VAT

Example of compliant presentation:

Consulting service: 1000 CHF
Loyalty discount 10%: -100 CHF
Net excluding VAT: 900 CHF
VAT 8.1%: 72.90 CHF
Total including VAT: 972.90 CHF

This transparency legally protects your company and avoids any confusion with your customers. A poorly structured invoice may be rejected by the FTA during an audit.

Discount strategies according to your business

Your customer discount policy must adapt to your sector and business model. An effective discount improves your sales without destroying your margin.

B2C commerce: Seasonal discounts (sales, Black Friday), product launch discounts, loyalty discounts after X purchases.

B2B services: Volume discounts (tiers according to annual amount), cash payment discounts (2-3% early payment discount), long-term partnership discounts.

Freelancers: Recurrence discounts (monthly subscription vs one-off project), multi-project discounts, referral discounts.

Define clear and documented thresholds. A 5% discount on orders >5000 CHF is more profitable than a systematic 3% discount on everything. Always calculate the impact on your margin before granting a reduction.

Discounts for early or cash payment

The early payment discount is a reduction granted in exchange for immediate or early payment. It's a powerful cash flow management tool.

Classic example: 2% early payment discount for payment at 10 days instead of 30 days.

Calculation of the real cost: On a 10,000 CHF invoice, you lose 200 CHF but recover your money 20 days earlier. Annualised, this equates to a rate of approximately 36% (2% × 365/20 days).

This strategy is profitable if:

• You have immediate cash flow needs
• Your margin far exceeds 2%
• You thus avoid bank charges (overdraft, credit)

The early payment discount also reduces the risk of non-payment and simplifies your administrative management. Mention it clearly on your invoices.

Loyalty discounts and volume discounts

Volume discounts reward large buyers and encourage growth in average basket size. Loyalty discounts value long-term relationships.

Example of volume scale:

• < 5,000 CHF/year: standard price
• 5,000-15,000 CHF/year: -5%
• > 15,000 CHF/year: -10%

Loyalty example: -3% from the 5th order, -5% from the 10th.

Impact: A customer who goes from 4,000 to 5,500 CHF to reach the -5% tier brings you 5,225 CHF net instead of 4,000 CHF. You gain 1,225 CHF despite the discount.

Communicate these tiers from the start of the commercial relationship. Your customers will buy more to benefit from the next tier, increasing your overall turnover.

How to apply discounts in BePaid

BePaid automatically calculates your invoicing promotions and guarantees the compliance of your QR-invoices, even with complex discounts.

You can apply discounts in two ways:

• Line discount: directly on each product or service
• Global discount: on the invoice total

In both cases, BePaid automatically calculates VAT on the net amount and generates a QR-invoice compliant with Swiss standards. The QR-code integrates the correct final amount, avoiding any payment error.

Discounts appear clearly on the PDF invoice sent to your customer, with a professional presentation that values your commercial gesture. All calculations are transparent and verifiable.

Create a line discount on an invoice

To apply a discount on a specific line in BePaid:

1. Create your invoice and add a product or service
2. Enter the standard unit price
3. In the "Discount" field, indicate the percentage (e.g. 10) or the fixed amount in CHF
4. BePaid automatically calculates the net amount of the line
5. VAT applies to this net amount

Example: Service 500 CHF with 15% discount = 425 CHF net displayed on the line. VAT 8.1% (34.43 CHF) is calculated on 425 CHF, not on 500 CHF.

This method is ideal for targeted discounts on certain products (clearance, product promotion) whilst maintaining the standard price on other lines.

Apply a global discount

The global discount applies to the total of all invoice lines. In BePaid:

1. Add all your products/services with their standard prices
2. At the bottom of the invoice, use the "Global discount" field
3. Indicate the percentage or fixed amount
4. BePaid automatically deducts the discount from the total
5. VAT is calculated on the final net amount

Example: Total lines 2,000 CHF, global discount 8% = -160 CHF, net 1,840 CHF + VAT.

This presentation highlights your overall commercial gesture and simplifies reading for the customer. It's particularly suited to loyalty discounts, partnership discounts or year-end discounts.

The generated PDF clearly displays the deduction, reinforcing the positive perception of your offer.

Accounting tracking of discounts and promotions

The accounting tracking of your discounts is essential to analyse their profitability and steer your commercial strategy.

BePaid allows you to export all your invoices with the detail of discounts granted. You can thus calculate:

• Your gross turnover (before discounts)
• The total amount of discounts granted
• Your net turnover (after discounts)
• The average discount rate per customer or period

Example: Gross turnover 120,000 CHF, discounts 8,400 CHF (7%), net turnover 111,600 CHF.

This analysis reveals whether your discounts really generate more volume or whether they simply erode your margins. Cross-reference this data with your project tracking to identify the most profitable customers and projects.

Analyse the impact of discounts on your margin

Calculating the VAT impact and margin impact of your discounts prevents you from selling at a loss without realising it.

Calculation method:

Your gross margin: 30%
Average discount granted: 12%
Sale price 100 CHF, cost 70 CHF = margin 30 CHF (30%)
With 12% discount: net price 88 CHF, cost 70 CHF = margin 18 CHF (20.5%)

Your real margin drops from 30% to 20.5%. On 100,000 CHF turnover, you lose 9,500 CHF in margin.

Critical threshold: If your gross margin is 15% and you grant 12% discount, your margin drops to 3%. One unforeseen event and you're making a loss.

Set a maximum discount rate compatible with your cost structure. Refuse requests that would take you below your profitability threshold.

Common mistakes to avoid

Certain errors in managing customer discounts can be costly, both financially and legally.

Calculating VAT on the gross amount: Illegal and you pay too much VAT. VAT must always be calculated on the net amount after discount.

Excessive discounts: A 20% discount on a 25% margin leaves you with only 5% margin. Two or three unforeseen events and you're making a loss.

No documentation: Without written conditions, customers will claim the same discount indefinitely. Formalise the conditions (duration, volume, occasion).

Inconsistency between customers: Granting 15% to one customer and 5% to another for the same volume creates tensions and damages your credibility.

Non-formalised discounts: "Verbal" rebates create undocumented expectations and complicate your management. Always confirm in writing.

Managing discounts and promotions in your invoicing requires rigour to remain compliant and preserve your margin. Whether you apply line discounts, global discounts or cascading discounts, the essential thing is to correctly calculate VAT on the final amount after deduction and to clearly mention the reductions on your invoices.

Discounts are a powerful commercial tool to retain your customers, encourage early payments or reward volume purchases. But their impact on your profitability must be measured regularly to avoid eroding your margins without realising it.

With BePaid, apply your discounts in a few clicks directly on your invoice lines or on the total, with automatic VAT calculation compliant with Swiss standards. Tracking your discounts and analysing their impact on your turnover becomes simple and transparent. Create your account for free and test discount management on your first 10 invoices without commitment.