import { Callout } from "zudoku/ui/Callout";

# Payment discount in the extended payment suggestion

How the extended payment suggestion in 365 business Banking finds and deducts payment discounts, by the same rules as the standard Suggest Vendor Payments.

With **Find Payment Discounts** in the [extended payment suggestion template](templates.mdx), the suggestion deducts the possible payment discount from the amount paid and also suggests invoices that fall due later but whose discount would otherwise lapse. It follows the rules of the standard **Suggest Vendor Payments**.

## Standard functionality in Business Central

In the standard **Suggest Vendor Payments**, the payment discount option also includes entries whose **Pmt. Discount Date** is before the last payment date even if the invoice itself falls due later. When posting, Business Central evaluates **payment discount tolerance** and **payment tolerance**. See [Microsoft Learn: Suggest vendor payments](https://learn.microsoft.com/en-us/dynamics365/business-central/payables-how-suggest-vendor-payments) and [Payment tolerance and payment discount tolerance](https://learn.microsoft.com/en-us/dynamics365/business-central/finance-payment-tolerance-and-payment-discount-tolerance).

## How the extended payment suggestion handles payment discounts

The extended payment suggestion deducts a payment discount if all of the following conditions are met:

1. **Find Payment Discounts** is turned on in the template.
2. It is a **vendor ledger entry**. There is no payment discount for refunds to customers or for employees.
3. The entry has a **Remaining Pmt. Disc. Possible** other than zero and a **Pmt. Discount Date** or **Pmt. Disc. Tolerance Date**.
4. The payment's **Posting Date** is on or before the payment discount date or, if the entry's **Pmt. Disc. Tolerance Date** is later, on or before that date. Business Central applies the same rule when posting.

In this case, the line pays the remaining amount less the possible payment discount.

**Which entries are found:** In principle, the **Last Due Date** applies. With **Find Payment Discounts**, however, a vendor ledger entry is also suggested if it falls due later but its **Pmt. Discount Date** or **Pmt. Disc. Tolerance Date** lies between the work date and the last due date. This requires that the payment still receives the discount. Without a last due date, there is no limit; in this case, all open entries are included.

**Which posting date the line gets:** Usually the work date. With **Use Due Date as Posting Date** turned on, the line gets the entry's due date. If the entry has a payment discount in this case and the **Pmt. Discount Date** is before the due date, the line is instead posted on the payment discount date so that the discount does not lapse. If the discount date is before the work date, the line is posted on the work date, as long as the discount is still granted then (for example up to the payment discount tolerance date). If that period has also expired, the due date is used.

**Tolerances:** If an entry carries an accepted payment discount tolerance or payment tolerance from an earlier application, the suggestion resets it, as the standard product does. If the suggestion deducts the discount after the payment discount date because the payment discount tolerance date has not passed yet, it accepts the payment discount tolerance on the entry (**Accepted Pmt. Disc. Tolerance**). Only then does Business Central also grant the discount when posting, and the invoice is closed afterwards. Business Central evaluates the payment tolerance again when posting.

## Examples

Invoice for 1,000.00 EUR, 2% payment discount until March 10, due March 30.

| Work date | Last due date | Use due date as posting date | Result |
|---|---|---|---|
| March 5 | March 31 | off | The invoice is suggested, the posting date March 5 is before the discount date: payment of **980.00 EUR**. |
| March 5 | March 15 | off | The invoice only falls due on March 30, but its discount date is within the period: it is suggested, posting date March 5, payment of **980.00 EUR**. |
| March 5 | March 31 | on | The invoice is suggested, the posting date is the discount date March 10: payment of **980.00 EUR**. |
| March 12 | March 31 | off | The discount date has passed: payment of **1,000.00 EUR**. If the entry has a **Pmt. Disc. Tolerance Date** on or after March 12, the payment is **980.00 EUR**. |
| March 12 | March 15 | off | The invoice is not due by March 15 and the discount date has passed: it is not suggested, unless its payment discount tolerance date lies between March 12 and March 15. |

<Callout type="tip" title="Meeting payment discount deadlines">
- Turn on **Find Payment Discounts** and choose the **Last Due Date** (or the **Last Due Date Formula**) so that it reaches the next payment run. Invoices whose discount expires before then are included in this run.
- Check the suggested lines before you pay.
</Callout>

## What the payment reference and the remittance advice show

The `{Applied Amount}` placeholder in the [message to recipient](message.mdx) shows the amount the line transfers for the entry, that is, the remaining amount less the payment discount. The `{Discount Amount}` placeholder returns the discount itself.

The [remittance advice](../remittance-advice.mdx) also states the payment discount before posting: if the payment settles the entry in full and its posting date is on or before the payment discount date or the later payment discount tolerance date, it shows the remaining discount under **Payment Discount** and the net amount paid as the amount. The advice and the suggestion apply the same rule, so the advice never states a discount the suggestion did not deduct. As a result, the total of the advice matches the amount transferred.

## See also

- [Which entries are suggested](entry-selection.mdx)
- [Set up extended payment suggestion templates](templates.mdx)
- [Payment discount, payment tolerance and partial payments on incoming payments](../../bank-reconciliation/payment-discount-tolerance.mdx)