Hi There,

I can see there are several ways to set up early payment discounts for vendors.  Just need clarification.

It does not make sense to me that the discount would be accounted for directly as income;  Yes it increases income but in the form of the reduction of the appropriate expense  - correct?  

If the above statement is correct - then I see that accounting for the discount can be tracked in several ways in QB Online:  1)  Create a vendor credit memo and apply at time of payment using the same product/service code as the original invoice;  2)  Set up a product / service line item assigned to the appropriate / corresponding account number for vendor expense and enter onto invoice as an additional "negative" amount to reduce the total invoice appropriately;  3)  Reduce the amount of the invoice entered at the time of entry by the discount.

*for #2 - for our particular company this item code could be easily be set up and used since any discounted purchases would be expensed to the same GL account.  In addition this would allow for tracking discounts should we wish to do so.

Am I on the right track here with the above?  

Thanks and hope you are staying healthy and safe.