Settlement discounts are cash discounts which are applied when a customer pays an invoice within a predefined timeframe. These discounts are generally used to incentivise early payments to improve cash flow and reduce the risk of delinquent accounts.
Dynamics 365 can define discount periods with the same settings that are used to define terms of payment, so that the exact cut-off date can be calculated accurately every time.
Net: The discount period is calculated by simply adding the net months and days to the invoice date.
Current month: The discount period will be to the end of the current month.
Current quarter: The discount period will be to the end of the current quarter.
Current year: The discount period will be to the end of the current year.
Current week: The discount period will be the end of the current week.
COD (Cash On Delivery): The discount period is equal to the due date.
Settlement discounts can only be defined as a percentage, there are no flat-rate discounts that can be applied with this functionality.
Cash discounts can also be set up in a sequence, so that various rates can apply over a period of time, and the correct rate is selected in the sequence.