“Terms” refers to the terms for invoice payments we offer to customers. The most common terms used in business are already setup in QuickBooks, only a few QuickBooks users ever need to setup their own terms.
These terms set the due date of invoices we create. Some include a discount offered to the customer in exchange for quick payment. An example would be 2% 10 Net 30. The customer may take a discount of 2% if the invoice is paid within ten days. Otherwise, the amount is due within thirty days.
The list of available terms can be a little hard to find the first time. Look in Lists->Customer & Vendor Profile Lists->Terms list.
Granting the discount, when the customer pays, is part of the Receive Payment process.
The circled message at the bottom of the Receive Payment window informs the QuickBooks user that the customer merits a discount. In this case, the customer paid the discounted amount.
To grant the discount, first select the invoice being paid in the list of open invoices shown in the Receive Payments window. Click the Discounts And Credits icon on the ribbon.
The ribbon, as shown in this screenshot, is the view that users of QuickBooks 2013 and 2014 will see. Earlier versions of QuickBooks will have a Discounts and Credits button, but it will be in the lower part of the window. This button will provide the same functions as the icon on the ribbon of 2013 and 2014 products.
QuickBooks does the math and computes the discount should be 2.48. As you can see in the screenshot, that amount can be edited. Usually the reason for editing would be a rounding error where the customer has calculated an amount a penny or two off.
Select the account to which the discount should post. Here, we have created an account for just that purpose, Discounts Given. Then click done and the discount is applied to the invoice/payment.
Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330
Once these discounts are applied, is there a way to send the customer an updated invoice showing the discount for their records? How would this appear on the updated invoice?
with QuickBooks Online, the client will automatically will see the invoice as paid if they open it again. Eitherway, you can send the client the invoice which will contain the “paid” stamp!
For vendor invoices…..if you have say 50 invoices, is there a way to “Batch” process the discounts so you don’t have to go into each invoice and apply the discounts? One time vs 50 times?
in using vendor payment terms..is it then a soft warning or hard warning upon payments
It looks like discounts affects the accounts receivable account, what about the sales account? or does it affect an expense account?
it affects whichever account you choose: Sales or Sales Discounts, etc