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Correct way to enter a Discount on a Vendor Bill.

Forum|Forum|7 years ago
December 11, 2018
45 replies
356 views

From one of our vendors, some of the bills are eligible for a percentage discount.

What is the correct way of entering this discount.

On the bill? At time of payment?

Does this get marked as an Income account or Expense Account ?

Thank you.

QuickBooks Enterprise Suite

Best answer by Rustler

It depends

If this is an early payment discount, then the intuit response is correct. early payment like in the terms 2/10/net 30, and you use an income account for the amount of the discount

If this is a purchase discount, then No, there is no discount entered at all. You enter the actual price paid <per the IRS

RustlerAnswer

Level 15

It depends

If this is an early payment discount, then the intuit response is correct. early payment like in the terms 2/10/net 30, and you use an income account for the amount of the discount

If this is a purchase discount, then No, there is no discount entered at all. You enter the actual price paid <per the IRS

A

arafath

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 ....

L

LCRM1

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.

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

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.

M

MichelleT

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.

Go to the Vendors menu.
Select Pay Bills.
Select the vendor bill.
Click the Set Discount button.
Enter the Amount of Discount.
Select the Discount Account.
You can click Add New if the income account is not yet listed.
Click Done.
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.

Rustler

Level 15

You need to qualify when this procedure is used, it is not a blanket type thing of always do this
and the account for select an account (which is really NO help at all when answering a question) is income

S

Stay Up

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.

Michael K

Level 4

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!

D

David_Lyash

I think it's ridiculous that QBO offers "3% 10 NET 30" as terms for vendors without the ability to automatically apply the discount if conditions are met. I used to have that feature in Quickbooks Desktop pro but not in QBO Advance. I am indignant as a consumer of their product. QBO advertises itself as a platform which automates most processes yet switching from QBD to QBO just adds layers of work on many things, especially when it comes to AP.
Going back to discounts on bills, sometimes I may have 100s of bills to which I need to apply a 3% discount. Btw, VERY common with a lot of vendors. It would take me less than a minute to apply the discount in Desktop Pro version. However, It would take me about an hour to enter 100s of credits against bills just to apply a 3% discount in QBO.

@books11249, customers are requesting that you add this feature asap. People have been writing about it for years and to no avail. It's about time someone pays attention up there. Please fix asap!

Rose-A

Level 10

It is always our aim to develop relevant features that came from customer's feedback, David_Lyash.

I know how important it is to automatically apply a discount to vendor bills in QuickBooks Desktop. However, this option is currently unavailable.

I can pass along all the feedback you have to the appropriate channels so you're able to reach a point of resolution as quickly as possible. Also, you can submit your feedback to make the program better by going to the Send Feedback Online on your QuickBooks Desktop.

In the meantime, I'd suggest visiting the What's New section on your QuickBooks Desktop, to stay informed with our latest news and updates including product improvements.

Additionally, you may want to bookmark this link: Resource Hub. This will provide you with resources and videos about managing your QuickBooks Desktop account, income, expenses, inventory, and running reports.

I'm always here to help if you have any other concerns or anything in QuickBooks. I'll make sure to get back to you as quickly as I can. Have a good one.

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