Discounts Overview

 

How does Brightflag collect and record discounts?

PDF submissions:

When a firm submits an invoice through Brightflag, they must include the discount on the invoice and/or include it during the invoice submission process 

 

During AI Processing, the invoice will be extracted, and any noted discounts will be listed on the invoice review page under the invoice total breakdown.

 

LEDES submissions:

There are two examples in LEDES of applying a discount:

1. Using IF as an adjustment and applying a negative value and description to explain the adjustment. This is its own line
2. Inline adjustment, using the negative value in LINE_ITEM_ADJUSTMENT_AMOUNT field. This is on the same line as the cost. 

 

IMPORTANT NOTE: Brightflag does not automatically adjust or apply a discount to an invoice. Brightflag will simply record and surface the discount provided by the firm during the invoice submission process.

 

IF VOLUME TRADE DISCOUNTS ARE ENABLED:

Brightflag’s Volume Trade Discount functionality can be enabled to verify that a firm has included an agreed-upon VTD on an invoice. 

 

This functionality will NOT apply a discount to an invoice, but will instead check to ensure that a firm has applied the correct Volume Trade Discount to an invoice. If a discount is missing, or if the discount is incorrect, Brightflag will trigger a ‘Volume Trade Discount’ flag on the invoice to notify the invoice reviewer to assess the invoice for accuracy and possible adjustment.

 

Volume Trade Discounts are configured on the ‘Vendor Management’ page, and provide flexibility to create bands for these discounts, if necessary. For example, for Firm A, you’ve agreed that for $0 - $1M in spend, Firm A will offer you a 10% discount. However, once you’ve surpassed $1M worth of work with Firm A, they will begin offering you a 15% discount. The configuration for this situation would like this:

When setting up the VTD, you will also need to select your fee type. This will determine which fees are factored into the band’s threshold calculation. The options are:

• Fees Minus Discount: determines the appropriate discount band based upon the collective total of the Net Fees of all the vendor’s invoices during the given time range. Expenses, taxes, and discounts are excluded.
• Gross Total Minus Adjustments: determines the appropriate discount band based upon the collective total of the Adjusted Totals of all the vendor’s invoices during the given time range. Expenses and Taxes are excluded.
• Gross Total Minus Tax: determines the appropriate discount band based upon the collective total of the Gross Total of all the vendor’s invoices, excluding Expenses, and taxes.

 

Important Notes: 

• Volume Trade Discounts are applied to all fees and are not applied to expenses.
• Volume Trade Discounts must be set with a date range within which the discounts are active. These dates are based off invoice date. 
  • EXAMPLE: your Volume Trade Discount is set with a date range of January 1, 2024 - December 31, 2024. An invoice submitted with an invoice date of January 31, 2024 WOULD be assessed to ensure the correct VTD was applied. Meanwhile, an invoice submitted with an invoice date of November 1, 2023 would fall outside the date range and WOULD NOT be assessed to ensure a VTD was applied.

 

New Discount Features

Automatically Recalculating A Discount

If a vendor is configured with a Volume Trade Discount and adjustments are made on an invoice, Brightflag can automatically recalculate the discount to ensure it matches the VTD percentage. This feature is particularly helpful if an invoice is being adjusted and approved as it can help ensure that an invoice is not approved with a discount that is higher than the configured VTD.

 

Important Note: this feature must be enabled on the back-end by Brightflag Tech Support. Please notify your Brightflag CSM if you would like to enable this discount auto-recalculation feature..

 

When and how will Brightflag automatically recalculate a discount?

There are four scenarios under which Brightflag will automatically recalculate a discount:

1. Flags: When an invoice is adjusted through the toggling of flags, the discount will automatically recalculate the match the configured VTD percentage.
   1. For example, you have an invoice with $1,000 in net fees from a vendor with a 10% VTD. The discount provided by the firm is $100, but you decide to toggle a flag that will reduce the invoice by $250. Brightflag will automatically recalculate the discount and bring it down to $75, which is now 10% of the reduced invoice total of $750. Therefore, the invoice will total at $675 after the write down and discount is recalculated.
2. When an invoice is adjusted at the invoice level
   1. For example, you have an invoice with $1,000 in net fees from a vendor with a 10% VTD. The discount provided by the firm is $100, but you decide to reduce the invoice at the invoice level by $250. Brightflag will automatically recalculate the discount and bring it down to $75, which is now 10% of the reduced invoice total of $750. Therefore, the invoice will total at $675 after the write down and discount is recalculated.
3. When an invoice is adjusted at the line item level
   1. For example, you have an invoice with $1,000 in net fees from a vendor with a 10% VTD. The discount provided by the firm is $100, but you decide to write down a single line item by $100. Brightflag will automatically recalculate the discount and bring it down to $90, which is now 10% of the reduced invoice total of $900. Therefore, the invoice will total at $810 after the write down and discount is recalculated.
4. When an invoice is adjusted using a combination of the three adjustment options listed above.
   1. When an invoice is adjusted in multiple ways, an order of operations will fall into place. Only one adjustment can be made at a time and only after the update is fully executed will the option to make further adjustments be available. For example, you have an invoice with $1,000 in net fees from a vendor with a 10% VTD. You decide to toggle a flag for $250, bringing the invoice down to $750. Brightflag will recalculate the discount to $75, which is now 10% of the reduced invoice total of $750. You decide to write down the invoice further at the line item level for an additional $150, bringing the invoice net fees down to $600. Brightflag will then recalculate the discount to $60, which is now 10% of the reduced invoice total. Therefore, the invoice net fees will total at $540 after the write downs and discount is recalculated.

 

The formula used to recalculate an invoice discount is:

 

Recalculated VTD Amount = ([total fees] - [adjustments]) * [VTD %]

 

This means that the ultimate gross total of a given invoice will be determined using the following formula:

 

([total fees] - [adjustments]) - [Recalculated VTD Amount] + [expenses] + [taxes] = Total to pay

 

With the ‘Automatically Recalculate Discount’ feature enabled, the VTD will not be split across all line items on an invoice and will instead be applied at the invoice level.

 

Manually Editing A Discount

Brightflag now allows users to adjust a discount at the Invoice Level. This is especially helpful in circumstances where:

1. A firm has submitted an invoice that is either missing a discount entirely or is not accurate
2. An invoice reviewer has adjusted an invoice, and the discounted total is no longer accurate
   1. EXAMPLE: Your firm has submitted an invoice with fees of $1,000 and included a Volume Trade Discount of $100 (10%). A reviewer marked down the invoice for a breach of the Outside Counsel Guidelines, and the new New Fee total is $750. As Brightflag does not automatically adjust the discounts of an invoice, the $100 VTD is now incorrect. The invoice reviewer would need to edit the VTD to $75 in order to avoid over-discounting the invoice.

 

The edited discount will be applied at the invoice total level - the discount adjustment will not be split amongst line items on an invoice.

 

If an invoice discount is adjusted, the reviewer is required to leave a note as to why the adjustment was made. This note will appear under the ‘History’ section of the invoice and is only visible internally (i.e. it is not shared with the vendor). If you want to make a comment for your vendor explaining why you edited the discount, please do so in the approval or rejection note.

 

Important Note: 

• Adjusting an invoice will not affect any flags on a given invoice. Flags are applied during AI Processing and will remain on the invoice as is once processing is complete. This means that if a reviewer adjusts an invoice and the Volume Trade Discount is now inaccurate, the flags on the invoice will remain static and will not mark that the discount on the invoice may now be inaccurate.

 

Upcoming Discount Feature

Brightflag is currently building out some additional discount functionality, including:

• The ability to exclude certain matters from the Volume Trade Discount feature. This will be useful for matters with AFAs or Fixed Fees. 
• Currency selection for Volume Trade Discounts.
• Ability to select Billing Period Start or Billing Period End Dates for Volume Trade Discount Date Range Configuration

 

Brightflag will notify you once these features are released and available for use.