Background
As an Accounting Basic or Premium customer, you can give a discount to specific products or services, a discount on the total amount of your customer invoice, or both. The discounts on invoices can be either a flat dollar discount or a percentage.
To add a discount to an individual product or service
Create the invoice by going to Accounting > Customer Tasks > Create Invoice.
Click “Discount” at the end of the line item that you want to add a discount.
You can choose to add an optional Discount Description. This will not appear to your customer, but you can choose to save this discount for future use. The Discount Description will pre-fill in the list to choose from. This will assist with reporting in the future.
Choose the Discount Type, either Percentage or Dollar Amount.
Enter the discount amount as a positive number. Percent discounts can be entered up to 2 decimals (example 5.75%).
Select the income account that you want to record the discount.
Click Save.
Repeat the process for each line item on the invoice you want to give a discount.
Before you create the invoice, you can edit the discount by clicking the discount amount. The edit box will appear for you to make changes.
To add a discount to the total invoice
You can add one total discount at a time to an invoice.
The products or services items on your invoice must either be all taxable or all nontaxable. If there is a mix of taxable and nontaxable items on the invoice, a total discount cannot be applied.
Create the invoice by going to Accounting > Customer Tasks > Create Invoice.
Under the invoice subtotal, click “Discount.”
Choose the Discount Type, either Percentage or Dollar Amount.
Enter the discount amount. This needs to be a positive number.
Select the income account that you want to record the discount.
Click Save.
You will see the discount dollar amount under the subtotal. Sales tax (if any) will calculate based on the discounted subtotal.
When you save and create the invoice, the discount will be displayed on the Invoice Details and PDF version of the invoice.
To edit or delete invoice discounts
You may edit or delete the discount any time while the invoice is saved as a draft, before you create the invoice. If you have already created the invoice and you want to change your discount(s), you will need to void the invoice and create a new one.
To edit the discount, click the discount link. Make your changes and click Save.
To delete the discount, click the trashcan icon next to the discount link below the Subtotal.
Recording the discount in your transactions
Patriot automatically handles the accounting for invoice discounts — you do not need to create a counter or contra-revenue account. When you add a discount, the discount amount is recorded as a debit to the income account you select, which reduces that income account by the discount amount.
Tip: If you want to see discounts as their own line on your reports instead of reducing your regular sales income account, you can optionally create a dedicated income account, such as “Sales Discounts,” and select that account when adding the discount.
When you view your General Ledger report, your discount will be recorded as follows, depending on your accounting basis:
If your accounting basis is cash or modified cash:
When the payment is received, the discount amount is recorded as a debit to the income account selected for the discount.
If your accounting basis is accrual:
When the invoice is created, the discount amount is recorded as a debit to the income account selected for the discount.
If your customer makes a partial payment on a discounted invoice, the journal entry will show a prorated discount, based on the percent of the total invoice. For example, if your customer paid 60% of the invoice, 60% of the discount will be recorded as a dollar amount.