Correct way to enter a Discount on a Vendor Bill.

Hi there faigy,

I'm glad you join the Intuit Community.

All you need to do is apply the discount when paying the vendor bills. This gets marked as an income since there is a price reduction instead of adding cost to the business.

Let me show you how to do this.

1. Go to the Vendors menu. 
2. Select Pay Bills.
3. Select the vendor bill. 
4. Click the Set Discount button.
5. Enter the Amount of Discount.
6. Select the Discount Account.
7. You can click Add New if the income account is not yet listed.
8. Click Done.
9. Click Pay Selected Bills.

You can refer to the screenshots that I've attached.

Just leave me a comment below if you have further questions with discounts and bills - I'm here to help.

Does that mean I need to create and apply a specific vendor credit for every bill every time I need to apply a "paid early discount"?  

Hi there, SSPF.

Allow me to step in for a moment and provide the clarification that you're looking for.

You've got it right. You'll need to create a vendor credit when you need to apply a discount for early payment. For additional insight about this, I'm also including these articles:

• Manage vendor credits
• Applying vendor credits

Keep in touch if there's anything else I can do for you. I'm always here to help you out however I can.

I may be missing something, but what is the "Intuit response" you talk about? 

Let me ease your confusion, @SWRG.

@Rustler is referring to the response provided by my colleague @MichelleT. 

As mentioned, when paying a vendor bill, you may directly apply the discounts and mark it as an income. Here's how:

1. Click the Vendors menu. 
2. Choose Pay Bills.
3. Select the vendor bill. 
4. Go to the Set Discount button.
5. Type in the Amount of Discount.
6. Select the Discount Account.
7. You can click Add New if the income account is not yet listed.
8. Click Done.
9. Hit Pay Selected Bills.

That should do it! Feel free to visit us here in the Community if you have other questions about paying and applying discounts on bills. I'm always here to help.

Ok, that part I have.  When entering the bill, I have the terms 1% 10th net eom, yet no date appears in the discount date box.  I would like to see the discount date, sometimes it can save us a couple hundred dollars.

Hello, @SWRG.

Thanks for the prompt response. I’m here to share some information about the Discount Date box.

I created a bill using my sample company file. I chose 1% 10th Net 30 as the Payment Term and the Discount Date box fills out automatically.

If this is not the case on your end, you need to review the Terms List and check that they are all defined correctly. Here's how:

1. Go to the Lists menu and select Customers & Vendor Profile Lists, then choose Terms List.
2. Double-click the term.
3. Check the setup and edit if necessary.
4. Hit OK.

If you’re still experiencing the same problem even after ensuring the set up is correct, let's run the Verify and Rebuild Tool. This fix data damage on the company file. 

Rebuild Data:

1. Go to the File menu.
2. Choose Utilities, then select Rebuild Data.
3. Select OK on the QuickBooks Information window.
4. Follow the prompt to save a backup.
5. When you see Rebuild has completed, click OK.

Verify Data:

1. Go to the File menu.
2. Choose Utilities, then select Verify Data.
3. If you see QuickBooks detected no problem with your data, click OK. You can continue using the company file.
4. If Verify finds an issue with your data, you’ll be prompted to Rebuild Now or View Errors.
5. Select Close.

See resolve data damage on your company file for more information.

That should do it. Let me know if this works out for you, and if I can be of additional help. Take care!

Let me help you ease your confusion, @Vacil.

Creating an income account that was discussed above is for QuickBooks Desktop users. As mentioned by my colleague GarlynGay, in QBO, you'll need to create a vendor credit so the system will allow you to apply it to the bill payments as a discount. I'm here to assist you with this.

First off, we'll need to create a vendor credit using the inventory item. Here's how:

1. Click the Plus (+) icon.
2. Select Vendor Credit.
3. Choose the vendor name.
4. Fill in the necessary information.
5. Click Save and close.

Once done, you can now apply the vendor credit to the bill as a discount.  Please refer to the screenshot below.

Also, I want to let you know when creating a vendor credit will automatically reduce the COGS. However, I still encourage seeking help with your accountant. He/she could guide you which option to take based on your recording practice and business needs.

In case you need tips and related articles in the future, visit our QuickBooks Community help website for reference: QBO Self-help.

If you have any other questions, feel free to comment below. We're always here to help you.

what if they put the actual price for one item but also gave the discount amount in separate?

I've been trying so long to enter the discount amount in vendor bill but still i can't ....

Hi arafath,

Your idea of adding the discount in the next line also works. Just make sure to select the right account to track it. I suggest consulting with an account on what account to use for your discount item.

Here's how to add a discount item.

1. Go to +New, then Bill.
2. Enter the Vendor name, in the Item details section add your item and amount.
3. On the next line, click the drop-down arrow under Product/Service.
4. Select + Add new.
5. Choose Service, then enter "Discount" as your service name.
6. Input other service item information.
7. Hit Save and close.

Once done, enter a negative amount for the discount.

The attached screenshot below will show you how it looks like to add the discount on the bill.

I've also added this article about "How to group Accounts Receivable or Accounts Payable account types" for your reference.

Please let me know if you have other questions. I'm always here for you. Cheers.

I have a related question.  How do I enter a discount on a check or credit card purchase.  We buy everything online, payment at checkout.  No Bill.  I have been using Contra-income account but it doesn't make sense to me because it's an income account and I have to enter the amount as a negative in the check/credit card purchase for it to reflect as a decrease in the amount owed but if it's an income account that account will also deduct the amount from income instead of counting it as income.

Hey there, @Stay Up. Thanks for joining the thread. 

Since every business is different, I recommend touching base with your accountant  to see what works best for your specific use-case.

Let me know if you have any other questions and I'll be happy to help out. Have a good one!

Hi There,

I can see there are several ways to set up early payment discounts for vendors.  Just need clarification.

It does not make sense to me that the discount would be accounted for directly as income;  Yes it increases income but in the form of the reduction of the appropriate expense  - correct?  

If the above statement is correct - then I see that accounting for the discount can be tracked in several ways in QB Online:  1)  Create a vendor credit memo and apply at time of payment using the same product/service code as the original invoice;  2)  Set up a product / service line item assigned to the appropriate / corresponding account number for vendor expense and enter onto invoice as an additional "negative" amount to reduce the total invoice appropriately;  3)  Reduce the amount of the invoice entered at the time of entry by the discount.

*for #2 - for our particular company this item code could be easily be set up and used since any discounted purchases would be expensed to the same GL account.  In addition this would allow for tracking discounts should we wish to do so.

Am I on the right track here with the above?  

Thanks and hope you are staying healthy and safe.

Which income account should be used