Dear Thea,
I’ve read your credit column for many years and have always enjoyed your perspective and insights. Thanks for writing it! In a recent column you stated “Everyone knows that you don’t get a discount on sales tax. No one offers it because it is a government required item to collect and not part of an optional program.”
While I know this is true in many areas, it’s not true here in Washington state. I have been a CPA for lumberyards for over 45 years and we are allowed to take a credit against taxable sales for prompt pay discounts. It really makes it easier on the customer since our 2% prompt pay discount here at our place applies to the entire statement balance.
I’d probably suggest to your readers that they check their state and/or local sales tax rules and see if they might be able to pass along additional discounts—I look at it as a service to our customers. Passing the tip along for what it’s worth.
Signed, Sharing CPA Secrets from Seattle
Dear CPA Secrets,
Thanks for the kind words about the column, but more importantly, for sharing your wisdom! I was aware that not all states charge sales tax but the twist in your state (and probably a few others) is a good call-out and a reminder that every state likes to keep things interesting.
I try to steer clear of the tax department (and its rules and regulations) often enlisting the tax manager to come to my aid to help out on the questions that went over my credit manager head.
You, my dear, are proof that no credit manager is an island and it takes a village to run a company. Not only does it give you another talking point with your customer, but it can highlight to those customers in a state that does not allow it, that you have examples to offer. You can educate and commiserate with your customer, and hopefully turn the situation around.
Feel free to drop education on us anytime, my friend!
With more than 30 years of credit management experience in the LBM industry, Thea Dudley consults with companies on a wide range of credit and financial management issues. Contact Thea at theadudley@charter.net.
