State the discount amount on an invoice

Some customers have a difficult time interpreting the early payment discount codes stated on invoices. A fairly common discount code such as "2/10 N30" (take a 2% discount if paid within 10 days, otherwise pay the full amount in 30 days) can be wildly misinterpreted, such as taking a 2% discount while still paying in 30 days. In addition, customers have a bad habit of using the invoice receipt date as the baseline date from which a discount is calculated, rather than the invoice date - which gives them several extra days in which to not pay the company.

To avoid these problems, do not list a discount code on any invoices issued. Instead, state the exact dollar amount of the discount that can be taken, and the specific date by which the discount must be taken. This information should be stated clearly on the invoice, in a spot where the information is clearly discernible. If the company's billing software does not provide this feature, then possible workarounds are:

  • Buy new billing software
  • Create a programming modification to allow for this feature
  • Manually include the information on the face of the invoice (which is probably too labor-intensive for smaller-value invoices)

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