A Payment Discount is the reduction a customer or your company may deduct when an invoice is paid before the discount date defined by the payment terms.
A Payment Discount, often called cash discount or early settlement discount, is a percentage the payer may deduct if the invoice is settled within a shorter period than the normal due date. In Business Central the percentage and the qualifying period come from the Payment Terms code on the document, which calculates a Pmt. Discount Date and an Original Pmt. Disc. Possible amount on the ledger entry. When the payment is applied on or before that date, the system posts the discount to the configured account and records it as the discount given or received, instead of leaving a small remaining balance.
The percentage and the discount period are defined on the Payment Terms page, which you reach with Alt+Q and a search for Payment Terms. The resulting values appear on the posted invoice and on the customer or vendor ledger entry as Pmt. Discount Date, Original Pmt. Disc. Possible and Remaining Pmt. Disc. Possible. The accounts used when the discount is posted come from the customer or vendor posting group setup, and general behaviour such as adjusting the discount for VAT is controlled in the general ledger setup.
Payment terms code 2%10NET30 means two percent within ten days, otherwise the full amount at thirty days. Sales invoice 103301 dated 2026-04-02 for CHF 12 000.00 gets a due date of 2026-05-02 and a discount date of 2026-04-12 with a possible discount of CHF 240.00. If the customer pays CHF 11 760.00 on 2026-04-10 and you apply that payment to the invoice, the entry closes fully and CHF 240.00 lands on the payment discount account. If the same amount arrives on 2026-04-20, the invoice stays open with CHF 240.00 outstanding.
The classic problem is a payment that arrives net of discount after the discount date: applying it leaves a residual balance that clutters the aged report, and someone later writes it off manually without a decision trail. Another is applying the payment to the wrong entry or applying by amount instead of by document number, which prevents the discount from being recognised. Finally, teams often forget that changing a Payment Terms code does not recalculate already posted documents, so the old discount date stays on existing entries.
Discount deadlines are a schedule problem more than an accounting problem, so review upcoming discount dates before each payment run rather than after. On the purchase side, the value depends on invoices being registered quickly: Zentriq Document Capture reads incoming vendor invoices into Business Central so the invoice date and terms are recorded early enough for the discount window to still be open.
On the Payment Terms page, in the Discount % and Discount Date Calculation fields. Assign that terms code to the customer or vendor, or directly on the document.
The most common causes are a posting date after the Pmt. Discount Date on the entry, or the payment not being applied to the specific invoice document number.
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