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Level 1

Early Payment Discount on Vendor Bill

I am using QB Desktop and I am having trouble getting early payment discounts to calculate properly. I have researched everywhere and cant find a solution. 

When I go to pay bills to vendors who offer early payment - the suggested discount offered by QB is on the pre-tax amount, not the total amount of invoice as it should be. Yes, I am able to edit discount amount, but it is a pain in the butt to do so as I have numerous tx's of this nature. So...how can I make the QB suggested discount amount - 2% of total invoice, not 2% of pre tax subtotal. 

Thanks a ton. 

13 Comments
Highlighted
Moderator

Early Payment Discount on Vendor Bill

Hi there, @Neil-rtv!

 

You'll have to select a term for your bills. I'm here to help you accomplish this so you can set a 2% discount.

 

To start with, selecting a term when you create a bill allows you to set a specific discount percentage.

 

That being said, here's how you can select a term for your bill:

  1. Go to Vendors.
  2. Select Enter Bills.
  3. Choose a vendor and enter a date for your bill.
  4. Under TERMS, choose a specific discount percentage.
  5. Select your items and enter the amount.
  6. Click Save & Close.

In addition, here's an article you can read to learn more about creating a bill: Enter Bills.

 

It'll be always my pleasure to help if you have any other questions. Just leave it in the comment section down below.

Highlighted
Level 1

Early Payment Discount on Vendor Bill

Thanks for the reply Jonpril. I think you misunderstood my question. I understand pmt terms and have them entered correctly. 

The problem is when I go to pay the bill QB calculated a suggested discount amount for me. I can either accept the suggestion or adjust to another amount. The suggested amount they are providing based on the 2% I have entered in payment terms is 2% on the subtotal (pretax) amount of the invoice. I need the discount to be 2% of the total invoice so I have to adjust discount for every payment to reflect this which is quite labour intensive. 

Highlighted
Level 1

Early Payment Discount on Vendor Bill

Thanks for the reply Jonpril. I think you misunderstood my question. I understand pmt terms and have them entered correctly. 

The problem is when I go to pay the bill QB calculated a suggested discount amount for me. I can either accept the suggestion or adjust to another amount. The suggested amount they are providing based on the 2% I have entered in payment terms is 2% on the subtotal (pretax) amount of the invoice. I need the discount to be 2% of the total invoice so I have to adjust discount for every payment to reflect this which is quite labour intensive. 

Highlighted
QuickBooks Team

Early Payment Discount on Vendor Bill

Hello Neil-rtv,

 

Another way to enter an early payment discount is to add it on the bill as a negative amount. This way, it won't calculate the payment terms discount. I can guide you through the steps.

  1. Open the bill, click the Expenses tab.
  2. Use the early payment discount account (income account), or create a new one.
  3. In the Amount column, enter the amount as negative number.
  4. Click Save & Close.

If the vendor has a term discount, you'll have to delete the Amount of Discount field manually before paying the bill.

 

Please see attached screenshot below.

 

Feel free to read this article for future reference: Add and match Bank Feed transactions.

 

I'll be around if you need anything else. Just click the Reply button anytime.

 

bd1.JPG

bd2.JPG

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Level 2

Early Payment Discount on Vendor Bill

These answers given don't answer the question. I thought the question was written very clearly...very frustrating. 

Highlighted
QuickBooks Team

Early Payment Discount on Vendor Bill

Thank you for coming to this thread, @ckernmeyer1.

 

I’m happy to assist you with early payment discounts. Discounts is a fixed amount or percentage you deduct from the total amount you owe to the vendor. You can set these to atomically use a fixed amount or you can enter your own. Any discounts given will apply to the pretax total only. The reason for this is you can’t apply a discount to sales tax percentages. To better understand discounts and how they work with the sales tax, I recommend contacting your accountant. They will be able to provide a more in depth explanation to assist.

 

Some customers have found this link about Pay bills in QuickBooks helpful:

 

https://quickbooks.intuit.com/learn-support/en-us/pay-bills/pay-bills-in-quickbooks-desktop/01/20137...

 

Please know I’m only a post away if you need me.

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Level 2

Early Payment Discount on Vendor Bill

Hi Emily,

You are not answering the question that was posted -- again. I appreciate that you are trying to help, but the person asking the question clearly already knew what you are repeating here to me.

No need to answer, since I am pretty certain Quickbooks does not have an option/answer to this.

Highlighted
Level 2

Early Payment Discount on Vendor Bill

Hi Emily, again, I hope I didn't sound rude. I see your point is more about no discounts on sales tax...

My problem is that I enter the sales tax as an item I created on the bills, so the discount is always on the post tax total and I have to change it to the pretax total.

Different counties or even cities where our suppliers/vendors are located use different tax percentages; I never tried to use Quickbooks to calculate tax by a percentage.

Thanks you

Highlighted
Moderator

Early Payment Discount on Vendor Bill

I appreciate you for clarifying the issue here in the Community, @ckernmeyer1.

 

Can you share with me how you enter the sales tax as an item? Any additional information like screenshots will help ensure a timely solution.

 

When paying the vendor bills in QuickBooks Desktop, the discount defaults to the post tax total amount. For vendors who are located in a different state, it's recommended to track the usage tax manually.

 

For the more information and detailed instructions, I recommend visiting the Track Usage tax article. It also contains some insights about the report you can run for the Use Tax.

 

Please don't get back to me if you have additional questions or concerns. I'll be around to help, Have a good one.

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Level 1

Early Payment Discount on Vendor Bill

My terms are too difficult to set up. Can you help me figure it out?  Terms for one vendor is:

3% 30th Net 31st.

 

Help!

Highlighted
Moderator

Early Payment Discount on Vendor Bill

Welcome to the QuickBooks Community, JaysLawn. Setting up payment terms can be done in a few easy steps. No worries, I will show you how.

 

  1. Go to the List tab, then Customer &Vendor Profile List, and click Terms List.
  2. Use the Terms drop-down arrow and hit New.
  3. There are two ways of setting this up. One can be done as a Standard, which means you want to have the payment due within a certain number of days from the invoice. An example of this would be if your invoice is due within 25 days of the receipt, the customer will receive a 1% discount if they pay within 10 days.
  4. The other payment term would be Date Driven, which means you prefer to enter the day of the month that the payment is needed within the due date. An example of this, your invoice is due the 25th day of the month, and you want to give customers a 1% discount if they pay by the 10th of the month. For Quickbooks to register this to know that "25" means the "25th day of the month" and not "25 days after the invoice date", enter 1% 10 Net 25. Here's a snapshot of it below.
  5. Select OK to close or Next to start another payment term.

The payment term you mentioned "3% 30 Net 31" would be categorized under Date Driven. For more information, this article compares the differences between Standard and Date-Drive payment terms. 

 

Please let me know if you need me to explain anything further. I'm just a comment away. Keep me posted and enjoy the rest of your day.

Highlighted
Level 1

Early Payment Discount on Vendor Bill

I've set it up as instructed, but it's not calculating properly.  For example.  The invoice date of the bill is 08/04/20.  All invoices written in the month of august are due 10/1/20.  If we pay by then, then we get the discount.  They say their terms are 3% 30th net 31st.  

 

Below is how I set it up and a copy of what it looks like on the bill.  It says discount date is 830, which is incorrect, it's 10/1 b/c it's 31 days from end of month date...Terms Capture.JPG Bill Capture.JPG

 

Please help.  Thanks!

 

 

 

Highlighted
Moderator

Early Payment Discount on Vendor Bill

Thank you for reaching back out and explaining the matter some more. Currently, the way your invoice is set up, it's supposed to be sent out on August 4th, due on August 31st, which allows the customer to receive a discount before August 30th.

 

However, I understand that you need that invoice sent out on August 4th, due on October 1st, so the customer can get a discount if they pay by then.

 

To correct this, you would need to change the due date to October 1st. After that, make adjustments to change the number in the Net Due and Discount If Paid Before boxes since they are set to the 31st and 30th, respectively. This way, it gives a discount for anything paid on or before that date.

 

Again, you're welcome to comment if you need any more clarification. I will be around to help.

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