how do you encourage clients to pay early you could give them an early pay discount however
to record that in quickbooks online you need a little bit of an explanation and guidance for
the set up if you have any questions about this topic you can leave them in the comment section
below and i'll do my best to help you and of course if you feel the video helped you i hope
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the time we discussed in the previous video all the attributes of qualifying sales discounts now
we're going to discuss early pay discounts we briefly mention how they are always a percent
of the sale and how they're only for invoices not sales receipts a customer receives the discount
if they pay the invoice within an agreed-upon number of days and you must put the terms of
that agreement on the invoice on the day of the sale for the customer to sign off on how does the
early pay discount work well the discount is usually a percent of the sale the discount is
only given if it's paid before a specific date the last day that the customer can receive the
discount when paying is called the discount date the customer can choose not to take the discount
and pay after the discount date however they still must pay before the final due date listed on the
invoice and then in that case they would have to pay the full amount so how do you set up for
an early pay discount well you have to activate the early paid discount in the company settings
window after you do that two things will happen fir this will put the discount account in the
chart of accounts to track the total of all early paid discounts given and secondly this
will add the discount field to the bottom of the invoice window let's go ahead and activate it we
click the cogwheel then we go across to company settings then we click the sales category and you
can see right now that the discount is off by default you can click anywhere here or in the
pencil to open up this little panel and be able to change these options and we are only going to
change discounts so we can click anywhere now that it's open we're going to click the box to
the left of the word discount and when we do that the word off becomes the word on now we save this
setting and click done let's take a look to see if it worked we can scroll down and click to the
chart of accounts and you can see the account on the list in the income category is or somewhere
on the income category will be the discounts for discounts given that's the name of the account
that quickbooks online automatically creates when you activate discounts in the company settings
window what else is different well if we click the plus sign and we go over to invoice you can scroll
to the bottom of the invoice window and see that now discount percent is added to the bottom of
the window and the second thing that you must do in order to set up for early pay discount is put
the terms that the customer will agree to on the terms list terms means the rules that you agree
with your customer regarding how the customer can get the early paid discount and they're usually
listed on the face of the invoice in this format for example if it's written 2/10 net 30 it means
the customer will get a 2 percent discount on the entire sale if the entire invoice is paid in full
within 10 days if not then no matter what the full amount of the invoice is due within 30 days what
if the terms are listed like this 115 net 45 this means the customer will get a 1 percent discount
on the total sale if the entire invoice is paid within 15 days if not then no matter what they
have to pay the full amount before 45 days of the date listed on the invoice to open up the terms
list and QuickBooks Online click the cogwheel and then go over and click all lists here's terms on
the list of lists if you click terms you see each term that already comes by default with QuickBooks
Online and we can make our own in the top right of the terms list you can click new now what terms
are we going to create let's make one that says 310 net 45 but instead of this format let's do
it the way it looks in with the other ones like this 310 net 45 when you make new terms you have
to put it in the name box exactly as you would like to see it appear on the invoice 3 percent
in 10 days net
45 and when and now we want to say well if it's due in a fixed number of days then the number
of days would be 10 10 days from the date of the invoice notice you don't put the percent
when you create the terms you simply create the label as the name and the number of days
click Save and now our terms is now listed on the terms list and we can use it to record an invoice
congratulations your QuickBooks Online is now set up and ready to use the early pay discount