How to Apply Discounts to Payments and Receipts in QuickBooks Desktop
Learn how to apply discounts when receiving payments and creating sales receipts in QuickBooks Desktop, including early payment discounts and write-offs.
When a customer pays less than the full invoice amount, whether through an early payment discount or a small balance write-off, QuickBooks Desktop gives you a way to record that difference directly on the payment form. The same principle applies when you build a discount into a sales receipt at the point of sale.
Applying a discount when receiving a payment
Open the Customer menu and choose Receive Payments. Select the customer and the invoice being paid. Enter the amount the customer actually paid in the Payment Amount field. When the payment is less than the invoice total, a Discount and Credits section appears at the bottom of the window.
Enter the discount amount in the Discount Amount field. QuickBooks will prompt you to choose a discount account, which tracks where the reduced revenue goes. Pick the account your firm uses for customer discounts or write-offs. You can also choose to apply the discount to a specific line item or let QuickBooks distribute it across the invoice.
Once you save the payment, the invoice shows as paid in full, and the discount amount posts to the account you selected.
Applying a discount on a sales receipt
Sales receipts work differently because there is no separate invoice to close out. To apply a discount, add a Discount item to the receipt itself. You need to set up a Discount item first, if you have not already, by going to the Item List and creating a new item of type Discount. Link it to your discount expense or contra-income account.
When you create the sales receipt, add the Discount item as a line and enter the amount or percentage. QuickBooks subtracts it from the total before recording the payment.
What happens behind the scenes
The discount account you choose determines how the reduction appears on your reports. Most firms use a contra-income account so the discount shows as a reduction of revenue rather than an expense. If you are unsure which account to use, check with your accountant before processing the first discount.
A common mistake to avoid
Do not simply enter a lower payment amount without using the Discount field. If you do, QuickBooks leaves the remainder as an open balance on the invoice, which can make reconciliation harder and inflate your accounts receivable. Always use the Discount and Credits section so the invoice closes cleanly.
If you run into trouble applying discounts or need help cleaning up invoices that were closed incorrectly, our team can walk you through the fix. See our QuickBooks data repair and cleanup service for hands-on help.