Possible Rounding Errors - Debtors

Rounding errors do not occur on non-discounted sales, since all items are priced to 5c and therefore can be charged exactly. If there is a discount, non-round values can occur.

There is no perfect method of handling rounding;

• Rounding down on the docket total is expensive in terms of profit.

• Rounding up would not be acceptable to the customer.

• Rounding nearest (Swedish) causes unproductive customer disagreement in a surprising number of the occasions when the rounding is up.

Rounding each item to the nearest 10c solves this by ensuring that an exact cash payment is possible and is fine for cash sales.

However, rounding to 1c is possible on accounts since these are often paid by direct credit and so payment to the exact cent is possible, and some business account customers are strongly price sensitive so exact pricing may be important to them. 

The method we have chosen after extensive discussion with users is;

• On dockets each item is rounded to the nearest 5c.

• On account statements the amounts are rounded to 1c .

A consequence of this is that an occasional discounted customer docket may have a few cents discrepancy from the amount on their statement.  

An example of the worst-case scenario is:

Item #1  $4.95 less 10% discount = $4.455

This is rounded to $4.46 on account, and $4.50 on docket

Item #2 $6.95 less 10% discount = $6.25

Rounded to $6.26 on the account and $6.30 on a docket.

Docket total $ 10.80,

Account total $10.72

This is not a calculation error but is an inherent consequence of providing for the different accuracies possible with cash and cheque payment. In no case can a significant amount of money be involved.