For example, the vendor is offering a 2% discount off the cost of the material on an invoice if you pay for the material 20 days earlier than you normally would – that is, you pay for it in 10 days rather than 30 days.If you earn a 2% return every 20 days, you will earn more than a 36% return on your investment every year. There are 365 days in a year, or about eighteen 20-day periods (18 * 20 days = 360 days). Even if I have to borrow money at a 6% annual interest rate, it makes sense to take advantage of this terms discount of “2% 10 Days Net 30 Days.” Even a terms discount of “1% 10 Days Net 30 Days” provides you with about an 18% annual return (1% * 18 = 18%).Automate calculations, manage employee data and run your payroll from the office or on the move with cloud or desktop based software.
You can find our latest free 8-page guide ‘5 reasons why you need integrated bookkeeping and payroll’ here.When a vendor offers extended terms, he or she is giving you more time to pay an invoice.Common extended terms include paying an invoice in “60 Days Rather Than 30 Days” or “90 Days Rather Than 30 Days.” What this means is that the vendor is giving you free use of money for either 30 days in the case of “60 Days Rather Than 30 Days” (60 Days – Normal Pay Period of 30 Days = 30 Days) or 60 days in the case of “90 Days Rather Than 30 Days” (90 Days – Normal Pay Period of 30 Days = 60 Days).Then when the bill is received, debit accruals when the bill is entered. Am I missing something, or does Quickbooks really not provide for a different expense date other than the bill date?If you have an actual invoice keep the date as 4/30 to record in proper period but manually change the due date to correspond with the actual date of the invoice.I strongly believe that you must stay disciplined to check the math on these offers.Kash Flow is designed to help make running small business (and larger companies) easy, without you needing any accounting or bookkeeping knowledge. You can also try Kash Flow Free for 14 days, and if you need it, there’s an online help section with video tutorials and more, as well as free email support.These are often referred to as “terms discounts.” A common terms discount is “2% 10 Days Net 30 Days.” This means that while the vendor expects to be paid within 30 days of the invoice date, he or she will allow the customer an additional 2% discount if the invoice is paid within 10 days of the invoice date.This month a reader sent an email asking why we almost always recommend taking advantage of these discounts.A range of software and services designed for businesses of any size – choose from advice services for a helping hand when you need it, or secure HR software to manage everything from employee data to recruitment.Powerful business-wide solutions for growing and large businesses that have outgrown their financial solution. Right now, if a bill is received in May, dated in May, but relates to services provided in April, the Company enters the bill date as April 30, in order to make sure the related expense in April.The other way this could be handled is to book a journal entry in April (debit expense, credit accruals) once we either know the amount of the bill, or can estimate the amount of the bill.Enter the invoice in May with the actual invoice date so it will age appropriately.