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An early payment discount lets a customer pay less when they pay an invoice by a set date. A term written as 2/10 Net 30 takes 2% off if the customer pays within 10 days of the invoice date; otherwise the full amount is due in 30 days. In DualEntry, you set the discount up once as a payment term. Every invoice that uses the term carries a discount date and a discount amount. A customer payment posted on or before the discount date takes the discount and posts it to your sales discount account. Early payment discounts apply to invoices and the customer payments that pay them. Bills, purchase orders, and vendors don’t offer early payment discount terms. For every field, calculation, and journal entry, see the Early Payment Discounts Reference.

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Before you start

Setting up early payment discounts touches your chart of accounts, your organization settings, and your payment terms. Check these before you begin:
  • A sales discount account: an account in your chart of accounts that receives the discounts customers take, usually a contra-revenue account named something like Sales Discounts. It can’t be a bank or credit card account.
  • The Administrator role, if you plan to set organization-wide default discount accounts. Only administrators can edit General Preferences.
  • A customer and an invoice to test with, so you can confirm the discount date and amount before customers see them.

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Set the default discount accounts

Default discount accounts save you from choosing an account on every early payment discount term. When you create a new early payment discount term, DualEntry pre-fills its account fields from these defaults.
  1. Open your organization’s name in the top left corner and go to Settings → General Preferences.
  2. Under Default Early Payment Discount Accounts, choose your sales discount account in the Money in column.
  3. In the Money out column, choose an account as well.
  4. Choose Save changes.
The Money out account matters even though bills and vendor payments don’t take early payment discounts. If it’s empty, every early payment discount term requires you to choose an A/P Purchase Discount Account before it saves. DualEntry doesn’t post anything to that account. Each term stores its own accounts when you save it. Changing a default later affects new terms only, so update existing terms yourself if you want them to post to a different account.

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Create an early payment discount term

An early payment discount term holds the discount percentage, the discount window, and the net due date that every invoice using it inherits.
  1. Go to Accounting Setup → Terms and choose New term.
  2. Under Type, choose Early payment discount.
  3. Enter a Name, such as 2/10 Net 30. DualEntry doesn’t generate the name from the numbers, so make sure it matches them.
  4. Under Discount, enter Discount %, Discount Days, and Net Days. Discount Days can’t be greater than Net Days.
  5. Check the Summary that appears once the three values are valid. For 2/10 Net 30 it reads “2% discount if paid within 10 days; otherwise, due in 30 days.”
  6. Under Discount Accounts, keep the pre-filled A/R Sales Discount Account or choose a different one for this term only.
  7. Save the term.
If you change an account away from the organization default, the field shows Overrides org default with a Reset link that puts the default back. Use an override when different terms need different coding, for example product sales and services. After you save, the term appears in the Terms list with its summary. You can now choose it on invoices or set it as a customer’s default term.

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Apply the term to an invoice

Invoices pick up an early payment discount term the same way they pick up any other term, and DualEntry calculates the discount date and amount when you save.
  1. Go to Money In → Invoices and create an invoice.
  2. Choose the customer.
  3. In Terms, choose the early payment discount term if it isn’t already filled in.
  4. Add the invoice lines and save the invoice.
The term can also arrive without you choosing it:
  • Customer default: the customer’s default term fills in when the invoice has no term yet. If you chose a term before the customer, your term stays.
  • Sales order: an invoice created from a sales order takes the sales order’s term, replacing the customer default.
While you edit, an alert under the Terms and Due Date fields shows the discount amount and the date it’s available until, and a caption under the grand total shows the discounted amount. If you change Due Date by hand, DualEntry clears the term, because the due date no longer comes from it. After you save, the invoice’s Overview shows the banner This invoice offers an early payment discount, and a Terms tab appears before Related Records. The Terms tab shows the discount date, discount amount, amount due, and a timeline of the discount window.

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Record a payment that takes the discount

A customer payment takes the discount when its posting date falls on or before the invoice’s discount date. DualEntry fills in the discount for you and posts it as its own line on the payment’s journal entry.
  1. Open the invoice and choose Record payment, or go to Money In → Customer Payments and create a payment for the customer.
  2. Set Posting Date on or before the invoice’s discount date.
  3. Under Open Transactions, on the Receivables tab, select the invoice. The Discount column fills in, and Payment Amount becomes the applied amount minus the discount.
  4. Review the warning Discount does not adjust tax. Review for VAT/GST. if it appears, then save the payment.
The invoice is paid in full once the cash plus the discount cover its total. For a $120,000 invoice on 2/10 Net 30 paid within the window, the payment deposits $117,600 and records a $2,400 discount. To collect the full amount instead, choose Clear discount on the invoice’s line. Choose Apply discount to bring the calculated discount back. A partial payment inside the window takes a share of the discount in proportion to the amount applied: applying $500 to a $1,000 invoice at 2% fills in a $10 discount. If you move Posting Date past the discount date, the Discount cell shows the expired offer amount followed by ended and the discount date, and no discount is taken. DualEntry doesn’t let you take a discount after the discount date. The VAT/GST warning appears on every payment that takes a discount. DualEntry posts the full discount to the sales discount account and doesn’t reduce the tax recorded on the invoice, so review any tax adjustment your jurisdiction requires.

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Troubleshooting

Most early payment discount problems come from the payment date, the term on the invoice, or a missing discount account. The table below lists the common symptoms.
Last modified on November 6, 2026