Offering cash discounts can be an effective strategy to encourage customers to pay their invoices early. By adjusting your payment terms settings, you can ensure that this process runs smoothly and that you can benefit from faster payments.
Prerequisites
The "Installment setting" area must have the installment type "Individual" for the cash discount settings to work.
Settings for the cash discount
- Discount days: The number of days the customer has to pay to use the cash discount.
- Discount %: Percentage discount offered.
- Grace days: number of days after the due date that the customer can pay and still get the discount. If the due date is the first of the month and the grace days are 2, the customer can pay until the 3rd and get the discount.
Generating VAT
When the customer pays within the cash discount timeframe, the system matches the payment against the invoice. The invoice shows how much discount the customer has received and remains open until you run the "Generate VAT on cash discount" routine. After you run the routine, the system closes the invoice against the payment.
