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

# Payment discount, tolerance and partial payments in application

This page describes how payment discount, discount tolerance and payment tolerance work when applying in the payment reconciliation journal, in the standard and with 365 business Banking.

When a customer pays less the discount, a few cents too little, or only part of the amount, application must determine whether the invoice is settled. Microsoft Dynamics 365 Business Central makes this decision. 365 business Banking does not perform any calculations of its own here but uses the standard.

## Standard functionality in Business Central

| Function | Effect | Setup |
|---|---|---|
| **Payment discount** | A payment up to the discount date may be lower by the discount amount. The entry is still closed. | Payment terms |
| **Payment discount tolerance** | The discount is still granted for a defined time after the discount date. | **General Ledger Setup**: **Payment Discount Grace Period**, **Pmt. Disc. Tolerance Posting** |
| **Payment tolerance** | Small over- or underpayments close the entry. The difference is posted to a tolerance account. | **General Ledger Setup**: **Payment Tolerance Posting**; batch job **Change Payment Tolerance** |
| **Payment tolerance warning** | When posting within the tolerance, Business Central asks whether to leave the remaining amount open or post it as tolerance. | **General Ledger Setup** |

In the payment reconciliation journal, automatic application compares the amount with the **Remaining Amt. Incl. Discount** if the payment is before the discount date, otherwise with the **Remaining Amount**. You set the tolerance for the amount comparison on the bank account card with **Match Tolerance Type** and **Match Tolerance Value**. On posting, Business Central applies payment discount, discount tolerance and payment tolerance according to your setup.

For more information from Microsoft, see [Work with payment tolerances and payment discount tolerances](https://learn.microsoft.com/en-us/dynamics365/business-central/finance-payment-tolerance-and-payment-discount-tolerance) and [Review or apply payments after automatic application](https://learn.microsoft.com/en-us/dynamics365/business-central/receivables-how-review-apply-payments-auto-application).

## What 365 business Banking adds

365 business Banking has no payment discount or tolerance logic of its own. The rules are defined in one place, your Business Central setup, and apply in the same way to every application, whether in the payment reconciliation journal, the cash receipt journal or the ledger entries.

365 business Banking adds the following:

- **Apply immediately.** If the standard option **Enable Apply Immediately Rules** is turned on in the **Payment Application Settings**, 365 business Banking calculates the amount comparison (within the tolerance) before the actual amount check. As a result, a payment application rule with immediate application also applies when 365 business Banking found the entry through its own matching.
- **Direct matching applies the full amount.** Reconciliation rules, on-account matching and payment code mapping enter the full bank transaction amount as the applied amount, also in Quick Apply. When an open entry is applied, the standard suggests the applied amount. Payment discount and payment tolerance are then applied by the standard on posting.
- **Remaining Amount After Posting.** On the **Payment Application** page, the **Remaining Amount After Posting** column shows a separate value with color coding for bank accounts with 365 business Banking (see below).

<Callout type="caution" title="Open sales documents and payment discount">
When assigning to [open sales documents](../payment-application-open-orders.mdx), 365 business Banking allocates at most the open amount of a document to it. This is the amount including VAT minus the amount already invoiced and minus the open preliminary entries of the same document. An order and an invoice with the same number are distinguished. The allocation does not deduct payment discount. If your customer takes a discount on a prepayment, check the assignment manually.
</Callout>

## Remaining Amount After Posting

The **Remaining Amount After Posting** column on the **Payment Application** page shows the amount that would remain open on the entry after posting:

- for posted entries as in the standard, for customer and vendor ledger entries less the recorded [deductions](../remittance-advice/payment-reconciliation.mdx#manual-application-with-a-deduction),
- for open sales documents: **Remaining Amt. Incl. Discount** minus **Applied Amt. Incl. Discount**.

The lines are color-coded: **green** if the entry is applied on this line (**Applied**), **red** if it is not applied and nothing would remain after posting.

The column shows this value for bank accounts with 365 business Banking. For all other bank accounts, it shows the standard field of the same name.

## Partial and multiple payments

**Partial payment.** Apply the entry on the **Payment Application** page with the amount paid. The remaining amount stays as an open entry if it is outside the payment tolerance. When posting within the tolerance, the payment tolerance warning (if turned on) decides whether the remaining amount stays open or is posted as tolerance. If **Retrieve Bank Transactions** applies with **Apply Automatically**, Business Central answers the payment discount tolerance warning and the payment tolerance warning without a dialog with their default option: a late payment discount is not granted, and no payment tolerance is posted. The remaining amount stays open and can be applied manually.

**One payment, several invoices.** This is supported in the standard if all entries belong to **one** account:

- **Automatically:** If the payment reference states several document numbers of the same customer or vendor and the entries add up to the amount, the standard applies one line to several entries (document number *Yes - Multiple*). The extended [document no. matching](document-no-matching.mdx) also finds shortened numbers.
- **Manually:** On the **Payment Application** page, select **Applied** for several entries of the same account and distribute the amount.
- **Group with a central account:** If a central account pays for several members, use [payment groups](../payment-groups.mdx).
- **Several open sales documents:** see [Application with open sales documents](../payment-application-open-orders.mdx).

**If a difference remains** that no entry explains, transfer it to an account with **Transfer Difference to Account**: [Reconcile payments that can't be applied automatically (Microsoft Learn)](https://learn.microsoft.com/en-us/dynamics365/business-central/receivables-how-reconcile-payments-cannot-apply-auto).

## See also

- [Apply bank transactions](apply.mdx)
- [Payment discount in the Ext. payment suggestion](../bank-payment/payment-suggestion/payment-discount.mdx)
- [How automatic application works](../concepts/how-matching-works.mdx)
- [Work with payment tolerances and payment discount tolerances (Microsoft Learn)](https://learn.microsoft.com/en-us/dynamics365/business-central/finance-payment-tolerance-and-payment-discount-tolerance)