Cash discounts can be set up for both customers and vendors and can apply to both sales orders and purchase orders. Customers obtain a cash discount when they pay their invoices within a specified period of time, and the company can likewise obtain cash discounts from vendors.
You create the cash discounts, which can apply to either customers or vendors, in the form. You can also define, by using the field, a series of cash discounts that succeed one another as the invoice due date approaches.
If an invoice is settled in time to obtain a cash discount, the cash discount is automatically posted to a cash discount ledger account according to the following account priority:
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The ledger account that is specified in the field in customer or vendor .
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The ledger account that is specified in the field or the field of the ledger posting group that is assigned to the sales tax code of the invoice.
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The ledger posting account in either the field or the field on the cash discount code of the customer or vendor that is on the settled invoice.
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The appropriate system account for cash discounts for customers or vendors, as defined in .
Example
Click or > > > .
Set up three cash discount codes as follows:
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Code 5D10% - A cash discount of 10% when the amount is paid within 5 days.
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Code 10D5% - A cash discount of 5% when the amount is paid within 10 days.
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Code 14D2% - A cash discount of 2% when the amount is paid within 14 days.
In the field:
For the 5D10% code, select 10D5%.
For the 10D5% code, select 14D2%.
For the 14D2% code, leave the field blank.
The three cash discounts succeed one another as the payment approaches the due date, and only one cash discount is granted when the invoice is paid.
