A prompt payment discount is a fixed or percentage amount discounted from an invoice, it will have a date where it expires (typically before the due date) and on that date the discount is automatically removed from the invoice, so that the invoice total is back to the original amount.
To use the prompt payment discount feature, create and approve the invoice but do not send it right away.
The discount will be added in the background (typically less than a minute later) and then you should see the discount on the invoice, and you can send it to your customer.
Note: If you edit an invoice - changing the amount or due date after the discount is applied, the discount will not re-calculate and will still be applied at the original date. We recommend duplicating the invoice using the Copy to option in Xero or the Duplicate option in QuickBooks to quickly make a new version of the invoice to update the amounts or dates. This way the discount will be re-calculated on the new invoice.
To set up a prompt payment discounts go the the prompt payment discounts menu option:
And click the button to create a new discount:
Then configure the prompt payment discount policy:
Choose a name, decide if it should be a fixed amount or a percentage, decide how many days before due date the discount expires, and which account and amount to use.
You can customise the messaging on the invoice line and there are also advanced options:
Lastly don't forget to assign the discount policy to a customer group (either the default group or a specific group).
Once created preview the discount on any existing invoice using the 'Preview actions' option for an invoice.
By default a new discount policy is not retroactively applied to old invoices, only to new invoices going forward, and only if those invoices are eligible. You can force a discount to be applied by processing specific older invoices using the 'process now' option for the invoice.
Changing a discount policy
If you make changes to a discount policy (for example changing the amount of the discount or the number of days to keep the discount) then these settings only apply on a going forward basis, already applied discounts will not change.