Early Payment Discount

In Zoho Books, you can offer discounts to customers who pay their invoices within a specified number of days before the due date.

Note: This feature is available only for certain plans of Zoho Books. Visit the pricing page to check if it’s available in your current plan.

Note:Early payment discounts cannot be applied to online payments made through payment gateways, including card payments, digital wallets and bank transfers.

Enable Early Payment Discount

To apply early payment discounts to your invoices, you need to enable the feature in your organisation. Here’s how:

Configure Payment Terms

Payment Terms in invoices specify the conditions under which a payment should be made. You can offer early payment discounts to customers by configuring payment terms. Here’s how:

Configure Payment Terms
Field Description
Number Of Days Enter the number of days by which the payment should be due.
Days Enter the number of days before the due date during which the early payment discount can be applied.
Percentage Enter the early payment discount percentage. Note that the percentage cannot be edited while recording payments.

You can modify these fields for this customer later, either on the invoice creation page or when recording their payments.

Configure Early Payment Discount for Invoices

To configure early payment discount for an invoice:

Note:If you have already configured payment terms for the selected customer, the Days and Percentage fields will be auto-populated.

Configure Discount Edit Early Payment Discount amount

The Total After Early Payment Discount field displays the total amount after deducting the early payment discount from the invoice total.

Note:The payment term you configure for your customer will be tracked under separate income accounts. To change the accounts, go to Settings > Preferences > Accountant > Early Payment Discount and click Configure Accounts.

Apply Early Payment Discount to Payments

When you apply early payment discount to an invoice payment, the discount amount will be divided proportionally between the sub total and the tax amount.

Let’s say the total of an invoice is €100, with a 10% tax rate. If you apply a 2% early payment discount, you save €2. This discount will be split between the invoice total and the tax amount. €1.82 will be deducted from the invoice total, reducing it to €98.18, and the remaining €0.18 will be deducted from the tax, bringing it down to €9.82. The total amount after the discount will be €108.

You can apply early payment discounts when you record payments for your invoices. Here’s how:

Apply discount

Note:The early payment discount is based on the exchange rate as of the invoice date, regardless of any changes in the exchange rate by the time of payment.

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