![]() For example, QuickBooks may automatically code a customer’s early payment discount as a credit to other income. In QuickBooks, the subtotal on the vendor invoice is before any sales tax.Īsk your CPA about proper discount account coding for your business if you’re unsure. Example :Ĭonsult your CPA and state regulations for whether you need to pay sales taxes on inventory items purchased for resale. If the customer doesn’t take the discount, they’re asked to pay the full amount of the invoice within 30 days. It means the vendor is offering a 2% discount for a customer payment within ten days of the invoice date. These are usually given as a percentage of the total invoice amount before any sales tax.Ī typical discount payment term offered by vendors is 2/10 Net 30. This is to indicate any early payment discounts. How is an Early Payment Discount Calculated?Įach vendor invoice includes the payment terms. Customers can try to negotiate with each supplier for better discount terms in both categories. These are also known as volume or quantity discounts and are for larger purchases. ![]() If they don’t take a discount, customers may not pay the bill until a good amount of time after the due date.īesides prompt payment discounts, vendors offer sales discounts.
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