Cash discounts
A Cash discount rewards a customer (or is offered by a vendor to you) for paying an invoice early - a small percentage off if payment lands within a set number of days of the invoice date, rather than waiting for the full due date. Unlike a payment fee, which is triggered by how a payment is made, a cash discount is triggered by when it's made.
Cash discounts are set up once, in a single shared screen, and can then be selected on either a customer's sales documents or a vendor's purchase documents.
Creating a Cash discount
Navigate to Accounts receivable > Payments > Cash discounts (or the equivalent Accounts payable > Payments > Cash discounts - both open the same list).
Select New and define, under Setup:
- Cash discount code: A short, unique identifier (e.g.
2%10). Cannot be changed after the discount is created. - Description: A clear explanation, typically stating the terms in plain language (e.g. "2% Discount if paid within 10 days").
- Discount percentage: The percentage taken off when the discount is earned.
- Discount method: Net calculates the discount on the invoice amount excluding tax; Gross calculates it on the full invoice amount including tax.
- Days / Months: How long after the invoice date payment must be received to still earn the discount. The deadline - the cash discount date - is the invoice date plus Days plus Months; a payment settling the invoice on or before that date earns the discount.
Then configure where the discount posts:
- Accounts payable > Main account for vendor discounts: The ledger account a discount you take on a vendor's invoice is posted to.
- Accounts receivable > Main account for customer discounts: The ledger account a discount you grant a customer is posted to.
The Accounts payable > Discount offset accounts field lets you choose between Use main account for vendor discounts and Use accounts on invoice lines. Only the first behavior is actually implemented - a discount always posts to the configured Main account for vendor/customer discounts, regardless of what this field is set to. Leave it on its default until per-line offset posting is implemented.
Assigning a Cash discount
A Cash discount isn't defaulted from the customer or vendor record - it's selected directly on the document:
- On a Sales invoice or Free text invoice's Payment Information section, select a Cash discount. Its Cash discount % field then fills in automatically from the code's Discount percentage and cannot be edited directly - change the Cash discount code instead.
- The same applies to a Purchase invoice on the Accounts payable side.
Once posted, the invoice carries its own cash discount date, calculated from its invoice date and the code's Days/Months - visible on the invoice and on its entry in Customer transactions or the equivalent vendor transactions view.
How the discount is posted
The discount is only realized when the invoice is actually settled - selecting a Cash discount on an invoice only makes it eligible, it does not post anything by itself.
When settling the invoice - through a payment journal's Invoice settlement dialog, or a cash-payment-term's automatic settlement - the invoice's pre-calculated discount amount is shown alongside the settlement, broken into Taken and To take. This lets you apply less than the full calculated discount if, for example, the payment arrived late but you're choosing to honor it anyway; the "Taken" figure is what actually posts.
Posting the settlement adds two entries on top of the settlement's own payment/receivable entries, additive rather than a replacement for them:
- A debit to the discount code's Main account for customer/vendor discounts, described as Cash Discount Taken.
- A credit (for a customer) or debit (for a vendor) to the same posting account the invoice itself uses, described as Cash Discount Offset - this is what actually reduces the customer's or vendor's balance by the discount amount.
Example: Settling an 8,255.63 sales invoice in full against Cash discount code 1%7 (1% Discount if paid within 7 days), with the full 82.56 discount taken, produces:
| Account | Debit | Credit | Description |
|---|---|---|---|
| Bank Account - Main | 8,173.07 | (the payment itself) | |
| Accounts Receivable | 8,173.07 | (the payment itself) | |
| Accounts Receivable | 82.56 | Cash Discount Offset | |
| Sales Discounts (4200) | 82.56 | Cash Discount Taken |
The customer's invoice still settles for the full 8,255.63 - the discount is recorded as its own pair of entries, not by reducing the payment or invoice amount directly.
Viewing cash discount transactions
A posted cash discount appears as its own row in Customer transactions (or the vendor equivalent), typed as Cash Discount, linked to the invoice it was taken against. Selecting the original invoice's row and choosing View settlements lists the cash discount as one of the transactions that settled it, alongside the payment itself.