It’s best when both vendors and customers have a company policy to create standards for offering and receiving early payment discounts. Any purchase order and vendor invoice should always show the payment terms.
As a customer, your company decides whether to take an early payment discount or pay a bill on/after the due date. Other names for this type of discount are a cash discount or a prompt payment discount.Įarly payment terms are much shorter than the number of days in a standard payment cycle. Suppliers offer an early payment discount to customers when they want to collect their accounts receivable quickly. Here’s a breakdown of how it all works: What is an Early Payment Discount? Coding bill payment discounts properly is part of the accounting process. You’ll reduce the cost of doing business when a discount amount is more than the finance charges-including loan interest.Īpplying early payment discounts in Intuit QuickBooks Online and QuickBooks Desktop is easy. When your cash flow is sufficient, take advantage of vendor discounts with early payment!
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