A financial discount or cash discount is offered to encourage your customer to pay the invoice faster. The customer can enjoy a usually small discount if payment is made within a certain number of days after the invoice is issued. The discount is always applied to the total amount of the invoice and can optionally be combined with a commercial discount.

To be able to grant financial discounts, activate this option on the Modules page.

A typical financial discount is 2% if paid within 8 days.

To apply a financial discount on an invoice, during creation or editing of the invoice, you can check ‘Financial Discount’ and enter the desired discount percentage and payment period.

Unlike a commercial discount, a financial discount is only granted if the customer pays within the specified period. After this period, the customer must pay the full invoice amount. However, since it is not known at the time of invoice creation whether the discount will be taken, the legislator has set specific rules.

The total amount stated on the invoice will be the full amount (i.e., without the financial discount). However, the VAT amount is calculated based on the total amount with the discount. The amount of the discount the customer can benefit from is listed separately on the invoice.

When you open an invoice with a financial discount, you will find two amounts: one without the financial discount and one with the financial discount. This allows you to easily determine the amount your customer will ultimately need to pay.

On the printed invoice, the following message will be added: "If paid by 14/03/2016, a discount of €2.00 (2%) can be deducted from the invoice amount."

If your customer takes the financial discount, a reduced amount will be paid. However, you still need to record the full amount without the financial discount as received payment to mark the invoice as PAID. Ideally, you should record the payment in two parts: once for the actual amount paid and then for the granted discount using the payment method ‘Financial Discount.’

Since an applied financial discount is considered a financial expense in accounting, the full amount without the discount is always recorded as revenue, even if the discount was applied.

Under Settings > Options, you can set the default discount percentage and the number of days for the payment term. You also have the option to apply financial discounts by default to every new invoice.