- Types of invoice discount
- How accounting describes early-payment discounts
An invoice discount is a reduction in what the client owes, shown on the invoice. The common types are an early-payment discount for paying before the due date, a volume discount for buying more, a promotional discount or coupon, and a discount on a single line. Whichever you use, show the full price, the discount and the amount due as separate figures, and state the terms that apply.
Billed publishes this page. Accounting definitions are quoted from the open textbook OpenStax Principles of Accounting, Volume 1, and Billed details from Billed's own pages, all opened on October 29, 2026. For how discounts affect your tax, ask your accountant.
Types of invoice discount
- Early-payment discount: a lower amount if the client pays within a set number of days.
- Volume or tiered discount: a lower price per unit above a quantity you set.
- Promotional discount or coupon: a reduction for a campaign, a new client or a code.
- Line-item discount: a reduction on one product or service, not the whole invoice.
How accounting describes early-payment discounts
OpenStax defines sales discounts as a "reduction in the selling price offered to customers who pay their account within the discount period; the actual account is a contra revenue account that reduces sales" (OpenStax, chapter 6 key terms).
Early-payment terms are written in a short form. OpenStax explains that "credit terms of 2/10, n/30 signal the payment terms and discount": the buyer "has ten days to pay its balance due to receive a 2% discount", and otherwise has "net thirty days" to pay in full without the discount (OpenStax 12.2).
Showing a discount on an invoice
- Show the full price first, then the discount as its own line, then the amount due.
- Name the discount, such as Early-payment discount or the coupon code, so the client knows why it's there.
- For early-payment terms, state the dates: the last day to pay with the discount, the discounted amount, and the full amount after that date.
- For a line-item discount, put it next to the line it applies to.
- Keep the same discount on recurring invoices only for as long as you've agreed to it.
Worked example (sample figures)
A sample supplier, invented for this example, sends a $5,000.00 invoice on June 1 with terms of 2/10, n/30.
- Discount if paid by June 11: 2% × $5,000.00 = $100.00
- Amount due by June 11: $5,000.00 − $100.00 = $4,900.00
- Amount due from June 12 to July 1: $5,000.00, the full amount
The invoice shows both amounts and both dates, so the client can choose. If the client pays $4,900.00 after June 11, the $100.00 is still owed under the terms on the invoice.
Where Billed fits
Billed's features page says: "You can easily give discounts to your clients on your invoices." It also says: "Create coupons to give discounts to your customers." Its invoice software page says: "Give a client a discount on an invoice, or create coupons." Its home page says: "Save discount codes and give your customers discounts quickly on Invoices."
When this guide isn't for you
If you need discount rules for contracts, government work or regulated pricing, or you're unsure how a discount affects sales tax, ask your accountant or a lawyer.
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Frequently Asked Questions
What does 2/10, n/30 mean on an invoice?
It means the client can take a 2% discount if they pay within 10 days; otherwise the full amount is due within 30 days. In this page's sample, a $5,000.00 invoice paid within 10 days costs the client $4,900.00.
How do I show a discount on an invoice without confusing the client?
Show the full price, then the discount as its own named line, then the amount due. For early-payment terms, also show the last date the discount applies and the full amount after that date.
What is a sales discount in accounting?
OpenStax defines sales discounts as a "reduction in the selling price offered to customers who pay their account within the discount period," recorded in "a contra revenue account that reduces sales".
Can I give a discount on one line of an invoice instead of the whole invoice?
Yes. A line-item discount applies to one product or service. Put it next to that line so the client can see which part of the invoice was reduced.
Does Billed support discounts and coupons?
Billed's features page says: "You can easily give discounts to your clients on your invoices." and "Create coupons to give discounts to your customers." Its invoice software page says: "Give a client a discount on an invoice, or create coupons."