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Applying a Negotiated Amount to an Open Invoice in QuickBooks

How to Reduce a QuickBooks Invoice Amount with a Discount

A reader wrote to ask how to handle a situation in which he negotiated a reduced payment amount for a QuickBooks invoice.

Don't change the invoice amount because you want to track the history behind the transaction in QuickBooks. Furthermore, if the invoice was created in a previous year, your tax return for that year won't match your records.

First, create an account named Discounts Given if you don't already have that account in your QuickBooks chart of accounts. (Ask your accountant if he/she prefers this account to be an Income or Expense account.)

Open the Receive Payments window in QuickBooks and select the customer/job and the invoice in question. Enter the negotiated amount as a payment. Then click the Discounts & Credits button, move to the Discounts tab and apply the unpaid balance to the discounts account. This clears the unpaid portion of the invoice, and the invoice has no open balance.

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