An early payment discount reduces an invoice amount when the buyer pays before the standard due date.
Early Payment Discount: operating record
| Area | What to establish |
|---|---|
| Mechanism | The invoice or agreement states the discount and qualifying payment deadline, such as a percentage reduction for payment within a specified period. |
| Evidence | Keep the agreed terms, invoice date, approval date, payment date, discount taken and any tax adjustment. |
| Limitation | A discount only works when invoice approval is fast enough to meet the deadline. Delays can create disputes over unauthorized deductions. |
Where the financing or obligation sits
The invoice or agreement states the discount and qualifying payment deadline, such as a percentage reduction for payment within a specified period.
What records support Early payment discount?
Keep the agreed terms, invoice date, approval date, payment date, discount taken and any tax adjustment.
A discount only works when invoice approval is fast enough to meet the deadline. Delays can create disputes over unauthorized deductions.
