Summary: Reviews how early pay discounts work and how to apply one.
Payables Permissions: Schedule payments and manage the AP workflow (recall, mark paid, post)
Early pay discounts are discounts offered by some suppliers as an incentive for early payment. They are based on when you make your payment in relation to the invoice date and the payment terms. For example, if the invoice date is August 1 and the payment terms are 2% 10 Net 30, then you can take 2% off your total invoice if you pay within 10 days (by August 11).
These types of discounts are not the same as discounts that are added as a line-item on your invoice. I you receive a discount as a line on your invoice as shown below, that is managed during the invoice coding process.
Before leveraging early pay discounts, Users must first link a General Ledger account to post the discounts in the ‘Payment settings’ tab of the Payables settings menu.
When an account is not specified in the settings, the User is prompted to link a General Ledger account for discounts in the confirmation popup.
QuickBooks Online does not support early pay discounts natively. Users will have to manually create the payment term in the format A/B Net C. A is the % discount when the invoice is paid within ‘B’ Days of the total payment interval of ‘C’ days (e.g. 2/10 Net 30). Be sure to specify for a bill or a Supplier.
How It Works
Centime will automatically calculate the discount amount based on the payment terms and invoice date. In the Unpaid invoices tab, invoices with a discount are identified with a ‘%’ icon in the ‘%’ column. When you make a payment, the GL account specified in the prerequisites will be where the discounted amount will post in your General Ledger for reconciliation purposes.
The color and shading of the ‘%’ icon indicates the discount's status. Fully shaded icons mean that the discount is applied.
Discounts that are amber-colored are closing soon. Icons turn amber when 80% of the discount window has closed. For example, if the payment terms are 2/10 Net 30, the icon will turn amber when 8 of the 10 days of the discount window have passed.
Users can apply a discount from the ‘Pay’ action under the ‘Unpaid invoice’ tab. Discounts can be applied even if the discount window has closed.
Under the 'Pay' action, click on a % icon for an invoice you want to apply a discount to.
Clicking on the icon displays the following information on the offered discount:
- Payment terms
- Invoice date
- Discount amount
- Expires on
To apply the discount, click on ‘Apply discount.’
To remove an applied discount, the User can click on the ‘Remove discount’ button.
After applying the discount, the user can schedule the payment as per usual.
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