Net sales - What are net sales?

The net sales figure is the sales figure after deducting the amounts for any discount given, any goods that may have been returned and any goods that have gone astray.

Keep track of your sales with SumUp Invoices - invoicing software.

The net sales figure gives an accurate account of your sales. As opposed to the gross sales figure, net sales is the total amount after discounts, returns and damaged goods are removed.

How to calculate net sales

If credit notes must be created for goods that have been returned by a customer for whatever reason, these will need to be deducted from your gross sales as these are not considered sales.

If any goods have been damaged while in transit to the customer, meaning that the order will need to be dispatched again, this will be taken into consideration and will reduce your gross sales figure.

In addition, to increase cash flow, it’s popular for companies to offer early payment discounts. These will also be deducted from your gross sales figure.

Most invoicing software will automatically calculate your gross and net sales figures.

Net sales vs. gross sales

Put simply, gross sales are your total before any VAT, discounts or other amounts are removed. Net sales are the result after these additional deductions are made. Gross sales allow a company to determine their ‘top line’, the total revenue before these amounts are removed.

Net sales can be considered the actual ‘top line’ as it provides a business with a clearer understanding of revenue.

Why net sales are important

Net sales are used in comparative measures. A company can compare their net and gross sales to other companies in the same field to catch problems early on before they become financial burdens.

In particular, they can indicate whether a business is providing too many discounts to customers or if they have a high percentage of returned goods.

The net sales figures are usually taken into account by investors when they’re evaluating whether to invest in a business as it’s the more accurate figure in determining or predicting the revenue a company receives from sales.

Net sales and invoicing software

With SumUp Invoices, you'll always have an accurate representation of your sales. You can keep track of your invoices, quotes, and credit notes in one simple platform. In addition, you can invoice from anywhere and on any device.