QuickBooks E-News Central -- Quick Tips for Users of QuickBooks

Quick Tips for QuickBooks: Customer Discounts Now and Later

You may need to give a discount for a preferred customer, the quantity ordered, a discontinued product, payment received before delivery, or other reasons. Wholesalers refer to this type of discount as a trade discount (for example, 40% off retail). This is an immediate "guaranteed see-it-now'' discount amount displayed on the invoice.

If you offer credit terms on your accounts receivable, you may offer a discount for timely customer payment at a later date. Businesses refer to this discount as a sales discount or cash discount. The discount is offered on the invoice, but is a "may see-it-later" discount if payment is received on or before the discount date. If payment is received after the specified discount period, you may choose to accept the discounted amount or ask the customer to pay the full amount.

You may offer some customers both the "now" discount and the "later" discount.
How do I calculate a "guaranteed see-it-now" trade discount on a customer invoice?

How do I offer a "may see-it-later" sales/trade discount for timely payment of a customer invoice?

Q:	How do I calculate a "guaranteed see-it-now" trade discount on a customer invoice?

A:	*Set up a subtotal and your discount percentage on the item list.* In QuickBooks 2000 through 2005, choose Customers > Create Invoices. (In QuickBooks 99 choose Activities > Create Invoices.) Select a Customer:Job. Enter the Quantity and select the Item (either a product or service). Repeat step 3 for each item you need to include on the invoice. Click in the Item field. Enter a name, such as 'Subtotal.' Press Tab. QuickBooks displays, "Item Not Found." Choose 'Yes' to add the item. In QuickBooks 99 through 2004 choose 'Set Up.' Select 'Subtotal' in New Item's Type dropdown. Choose OK to create the Subtotal item. Press Tab. Notice the Subtotal calculates the dollar amount in the Amount column. If you have just one item to discount, you can delete the 'Subtotal' in the invoice row and continue with step 14. Click in the product's Item Code or service's Item field on the next available row. Enter the name of the discount (for instance, '10% discount'). Press Tab. QuickBooks displays, "Item Not Found." Choose 'Yes' to add the item. In QuickBooks 99 through 2004 choose 'Set Up.' Select 'Discount' in the Type dropdown. Click in the 'Amount or %' field. Enter '10%.' IMPORTANT: enter the percentage symbol or QuickBooks will calculate a $10.00 discount. Press Tab to move to the Account field. Enter the name 'Discounts given.' Press Tab. QuickBooks displays "Account Not Found." Choose 'Set Up.' Select Type 'Income' for proper placement on the Profit & Loss (income statement). Choose OK to create the account. Choose OK to create the Discount item. Press Tab. Notice that '-10%' displays on the invoice with the negative dollar amount of the discount. Click in the Item Code or Item column below '10% discount.' Enter 'subtotal' to QuickFill the Subtotal item you previously set up. Press Tab to move out of the field. Notice the amount column displays the amount due less the discount. Choose Save & Close. In QuickBooks 99 choose OK.
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Q:	How do I offer a "may see-it-later" sales/trade discount for timely payment of a customer invoice?

A:	*Set up your terms, including the discount percentage and discount date, on the terms list.* In QuickBooks 2000 through 2005, choose Customers > Create Invoices. In QuickBooks 99 choose Activities > Create Invoices. Select a Customer:Job. Click in the 'Terms' field. IMPORTANT: the Terms field is available on the default product invoice, but not on the default service invoice. Enter a name for your terms (for instance, '2% 10 net 30'). Press Tab. QuickBooks displays the "Terms Not Found" dialog box. Choose 'Set Up.' Press Tab twice to move to the "Net due in 0 days field." Enter the due date (for instance, 30). Press tab to move to the percentage field. Enter the discount (for instance, 2%). Press tab to move to the discount days field. Enter the discount allowed days (for instance, 10). Choose OK to save the discount. Enter the Quantity and select the Item. Repeat step 15 for each item you need to include on the invoice. Choose Save & Close. In QuickBooks 99 choose OK. Tip The invoice does not show the amount of the "may see-it-later" discount. The customer has to calculate the amount (for instance, $100.00 product @ 2% = $2.00 discount if payment submitted within 10 days). You can see the discount amount and discount date by choosing Customers > Receive Payments (in QuickBooks 99 choose Activities > Receive Payments). Select the Customer:Job and the Invoice. Click on the Discount & Credit button (Set Discount button in QuickBooks 2002 to 2004; Discount Info button in QuickBooks 99 through 2001).
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