I have some vendors that offer early pay discounts such as 3% net 10. Can I set this up to auto calculate in QBO?

QuickBooks Online (QBO) doesn't support setting a specific discount rate on a vendor bill, Tony. Therefore, the option to automate discounts for vendor transactions isn't available. I'll provide more details and a workaround to help you sort this out.

When applying a 3% discount to a vendor bill, ensure you've already taken it off from the transaction before entering the bill into the system. That said, the amount that the bill should have will be the discounted price and not the original amount. It'll help maintain transaction accuracy and keep your books organized.

To track the discount accumulated for paying the bill early, you can set up an account and use it whenever you enter a discounted vendor bill in QBO. For more details, please see this page: Add an account to your chart of accounts in QuickBooks Online.

Also, if you want to have the option to automate vendor transaction discount, consider sending a feature request to our Product Development Team. Explore the Submit feedback for QuickBooks Online section in this article: Give feedback on QuickBooks products and services.

In addition, you can utilize vendor reports and modify them to improve tracking vendor transactions and discounts in QuickBooks. Feel free to visit this article for more details: Customize reports in QuickBooks Online.

Need assistance stepping up your bill management or QuickBooks basic processes? Our QuickBooks Live Expert Assisted can offer tips and guide you on how to improve the process of handling this task. Feel free to check them out anytime.

I can also assist whether you'd like to track vendors for 1099s or streamline transaction management within the program. I encourage you to utilize the comment section below for a prompt response. Keep safe.

@Kurt_M 

RE: When applying a 3% discount to a vendor bill, ensure you've already taken it off from the transaction before entering the bill into the system. That said, the amount that the bill should have will be the discounted price and not the original amount. It'll help maintain transaction accuracy and keep your books organized.

No, that's completely wrong. The bill should be entered for the bill amount. Any discount is related to the payment, not the bill, and can only be taken if the bill is paid during the discount period.

A discount should be recorded when it is taken, which may be in a different accounting period.  This is true for both A/P discounts from vendors and A/R discounts offered to customers.  Both should be recorded on the payment date, not the original transaction date.

@BigRedConsulting 

"No, that's completely wrong. The bill should be entered for the bill amount. Any discount is related to the payment, not the bill, and can only be taken if the bill is paid during the discount period."

Not necessarily.  GAAP allows companies to record payables using either the gross or net method.  You're referring to the gross method that records payables without regard to the discount, which is perfectly acceptable.  The net method records payables with the discount, which is also perfectly acceptable.    

Point taken, though it still seems upside down.

I guess if you miss the discount period you can go back to bill and update its detail and re-enter the whole thing according to the actual bill you got. Of course, it may be in a prior accounting period...

That's a double-edged sword I guess.  If you're on accrual basis and record the gross payable amount in a prior period and take the discount in the current period, you're overstating your expenses in the prior period.  If you record the net payable amount and miss the discount, you're understating your expenses in the prior period.  Perhaps that's why both are acceptable, because neither is perfect.