Early Payment Discounts in Odoo#
Payment terms like "2/10 Net 30" offer a 2% discount if the customer pays within 10 days, otherwise the full amount is due in 30 days. Odoo supports this through payment term configuration with cash discount lines.
Creating Payment Terms with Discount#
Accounting → Configuration → Payment Terms → New:
- Name: 2/10 Net 30
- Note on Invoice: "2% discount if paid within 10 days; otherwise due in 30 days"
Lines:
| Line | Type | Value | Days |
|---|---|---|---|
| Line 1 | Percent | 98% | 10 days (with cash discount 2%) |
| Line 2 | Balance | - | 30 days (remaining balance) |
On Line 1: enable Cash Discount → 2%.
Applying to a Customer#
Customer Partner → Sales & Purchase tab → Payment Terms: select "2/10 Net 30".
All invoices to this customer default to these terms.
How Odoo Handles the Discount#
When an invoice with 2/10 Net 30 is posted:
- Due date = 30 days (full amount)
- Cash discount date = 10 days
- The invoice shows both dates and amounts on the PDF
When the customer pays within 10 days:
- Register payment → select the invoice
- Odoo recognizes the discount date has not passed
- Prompts: "Apply cash discount?" → Yes
- Odoo posts:
- Payment: 98% of invoice
- Write-off: 2% to Cash Discount Expense account
Setting Up the Cash Discount Account#
Accounting → Configuration → Settings → Payment Terms:
- Cash Discount Account: select an expense account (e.g., Sales Discounts 610500)
- Cash Discount Tax Adjustment: whether to adjust VAT on the discount amount (country-specific)
Reporting on Discounts Taken#
Accounting → Reporting → General Ledger → filter by Cash Discount Expense account:
- Total discounts granted this period
- By customer (which customers consistently pay early to take discounts)
Vendor Payment Terms (Discount Received)#
Apply the same concept to vendor bills:
- Vendor offers 1/15 Net 45 (1% discount if you pay within 15 days)
- When paying early: Odoo posts the discount to Cash Discount Income account
- Track discounts earned to optimize your payment timing
Cash Flow Impact#
Early payment discounts cost revenue but improve cash flow timing:
- Receiving 98% in 10 days vs. 100% in 30 days
- Annualized cost of discount: 2% / 20 days × 365 = ~36% APR equivalent
- This is expensive capital - only offer early payment discounts when cash flow genuinely benefits