How do I add discount terms for a vendor. We get a 2% discount if paid by the 10th of the next month.

Welcome to the Community page, ddmjulie.

Let me help you set up a 2% discount with a vendor in QuickBooks Online (QBO) if you pay by the 10th of the next month.

We can generate a bill and schedule the payment terms for the 10th of the following month. Setting terms in bills is essential to clearly define the payment conditions agreed upon including the due date and any specific payment policies. Here's how to set terms:

1. Click on the + New button.
2. Choose Bill from the available options.
3. Use the Vendor dropdown menu to select the appropriate vendor.
4. Select or set new payment terms for the bill from the Terms dropdown menu. This indicates when the vendor expects payment.
5. Input the Bill date, and Bill number as indicated on the physical bill.
6. In the Category details section, input your bill specifics. Use the Category dropdown to choose the expense account that tracks these types of transactions and provide a relevant description.
7. Enter the total Amount and any applicable tax.
8. If this expense will be billed to a customer, check the Billable box and type in the customer's name in the Customer field. To understand more about billable expenses, consider exploring further resources.
9. Once completed, click on Save and Close to conclude the entry.

Furthermore, to apply or add a discount for your vendor, you can create a vendor credit memo for the amount using an income account, that 2% discount will serve as your income. Then apply the credit memo to the bill and pay the balance. This essentially records a reduction in the amount owed to a vendor. When you pay a vendor bill early and receive a discount for doing so, you can record this discount using a credit memo. Here’s how:

1. Click on the + New button.
2. Choose Vendor Credit from the options.
3. From the Vendor dropdown menu, select the vendor you want to choose.
4. Enter the necessary details under Category Details choose an income account you want your credit to be put.
5. Input the amount and then click on Save and close to finalize the transaction.

Additionally, I'm including this article for future reference on how to track bills and record the payments: Enter and manage bills and bill payments in QuickBooks Online.

Furthermore, if you need assistance in setting up transactions properly, consider adding QuickBooks Expert Live Assistance to prepare your business for success. Our experts act as your personal financial guides, simplifying complex accounting tasks and ensuring compliance with ease.

For further questions related to managing discount terms for a vendor in QuickBooks Online, drop your reply below. The Community is available 24/7.

@ddmjulie-irrigation 

Discounts in QB Online are not very intuitive like they are in QB Desktop.  IMO, using a credit memo is too complicated.  Let's say you have a $1,230 bill due April 10.  I would just enter the bill due date as April 10 and in the AMOUNT field, type 1230*.98, and QB will do the math for you. 

If you need to track the discount as a separate line item on your P&L, then you need to enter the discount as a separate line item with a separate account and the amount as a negative.  In that case, enter -1230*.02.  You could use a credit memo in this case as well, but I think that's too complicated.