> ## Documentation Index > Fetch the complete documentation index at: https://docs.dualentry.com/llms.txt > Use this file to discover all available pages before exploring further. # How to Offer Early Payment Discounts > Set up a 2/10 Net 30 style payment term in DualEntry, apply it to invoices, and record customer payments that take the early payment discount. 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](https://docs.dualentry.com/accountants/core-financials/accounts-receivable/early-payment-discounts-reference.md). ## 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](https://docs.dualentry.com/accountants/core-financials/general-ledger/create-and-manage-accounts.md) 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](https://docs.dualentry.com/accountants/platform-configuration/organization-settings/general-preferences.md). * **A customer and an invoice to test with**, so you can confirm the discount date and amount before customers see them. ## 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. ## 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. ## 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](https://docs.dualentry.com/accountants/core-financials/accounts-receivable/order-management.md) 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. ## 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. ## 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. | Problem | Cause and fix | | - | - | | The **Discount** column shows no discount for an invoice. | The payment's **Posting Date** is after the discount date, or the invoice's term isn't an early payment discount term. Check the invoice's **Terms** tab for the discount date. | | `Sales discount account is required to take an early-payment discount.` | The invoice's term has no **A/R Sales Discount Account**. Edit the term, choose an account, and save the payment again. | | `Discount days must be less than or equal to net days` | **Discount Days** is greater than **Net Days** on the term. Lower **Discount Days** or raise **Net Days**. | | The term disappeared from an invoice after you changed the due date. | Editing **Due Date** by hand clears the term. Choose the term again to restore the calculated due date and discount. | | An invoice kept its old discount after you edited the term. | Saved invoices keep the discount they were saved with. Saving the invoice again recalculates it from the term's current values. | | `Cannot archive Term because it is currently in use` | A customer, vendor, or record that isn't archived still uses the term, even if it's paid, or the term is the organization's default term. Move those to another term first. | | Early payment discount terms don't appear on a bill, purchase order, or vendor. | Expected. Early payment discounts apply to invoices and customer payments only. | ## Related * [Early Payment Discounts Reference](https://docs.dualentry.com/accountants/core-financials/accounts-receivable/early-payment-discounts-reference.md): term fields, calculations, journal entries, and limits * [How to Record Customer Payments](https://docs.dualentry.com/accountants/core-financials/accounts-receivable/customer-payments.md): the rest of the customer payment workflow * [How to Invoice Customers and Run Dunning](https://docs.dualentry.com/accountants/core-financials/accounts-receivable/invoicing-and-dunning.md): creating and sending invoices * [General Preferences](https://docs.dualentry.com/accountants/platform-configuration/organization-settings/general-preferences.md): the default discount account settings This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.