How to allocate a 30 day incentive discount

Created by Dan Trevarthen, Modified on Tue, 9 Jul at 5:52 PM by Laura Gannon-Berg

Q: We have a client who takes a 5% discount for payment within 30 days. When we receive payment, how can I allocate that discount? We are cash-based accounting.

A: Either before or after receiving the payment do a regular write-down of the invoice and take 5% off the fees. Specify whatever GL is designated to receive and track the discount.