Apply early payment discounts

This article is relevant to Chaser users who want to incentivize early payments by offering discounts to customers who pay before a specified date.

Set up early payment discounts in Chaser

1. Navigate to Manage and select the Early payment discounts tab.
   
2. Click on Edit
   
   
3. Choose a discount type:
   • Fixed amount (e.g., £10)
   • Percentage discount (percentage of the invoice total)
     
     
4. Set parameters:
   • Discount deadline: Choose how many days before the due date the early payment discount expires.
5. Select how to update fees:
   • Update invoice in Xero (Xero users only)
     1. Choose this to automatically add the discount to the invoice as a new line item
        
        
        
        
     2. Choose invoice-related settings which will show on your invoice line item:
        1. Account, Tax Rate, Item, and Description
    
   • Email notification 
     1. Email 1: Invoice eligible for early payment discount (No action required).
        This notification provides a summary of all invoices that qualify for an early payment discount. No action is required at this stage. The Chaser payment portal will display the discount and the placeholders in templates will be available, meaning that if your customer makes a payment, they should make the payment minus the discount that you've applied. Once the invoice has been paid, you'll receive an email stating that the payment has been made, and you can apply the discount to the invoice at this stage.
        
        
        
        1. An email will be sent each time an action is required (for example an early payment discount needs to be added or removed). This can happen in the following circumstances:
           1. Settings for early payment discounts are changed in Chaser
              1. Schedule added or removed
              2. Discount amount changed
              3. Discount deadline changed
           2. Or if changes occur in your accounting system/ERP such as
              1. A new invoice is added
              2. An invoice due date is changed
              3. An invoice is no longer eligible for an early payment discount 
     2. Email 2: Informing you that an invoice has been paid (action required)
        
        

These emails will be sent to users who have the following notification settings enabled. This will be automatically enabled for the user who enabled the early payment discount.

1. 1. 1. 1. Decide the fee and understand how tax is calculated
            1. See the Tax considerations when selecting the option to receive email notifications to understand how to ensure tax is considered and correctly applied to your invoices manually.

1. Choose which schedules the early payment discounts will automatically apply to 
   
   
2. Choose which schedules the early payment discounts will automatically apply to:
   1. All associated invoices have early payment discounts applied automatically per the settings.

Update early payment discount settings

Any changes to your late fee settings are applied instantly to all relevant invoices. For example, increasing the fee from 5% to 10% will automatically update all existing invoices that include early payment discounts.

Filter on invoices with an early payment discount

See which invoices have early payment discounts applied using the filter on the Receivables, Invoice list.

Invoices with a discount applied show as discounted in the invoice list.

Payment portal

Your debtors will be able to view their early payment discounts in the payment portal and make payments for invoices that are eligible for an early payment discount.

When your debtor hovers over the tooltip, they’ll see which invoices offer an early payment discount.

Use placeholders for early payment discounts in your templates

Personalize your reminders and clearly communicate any discounts or fees with your debtors by including invoice-related placeholders. Add these to your templates to automatically show relevant amounts, based on the invoices included.

Single templates (All channels)

These placeholders display the fee or discount for each invoice:

• Invoice: Early payment discount – Shows the discount for early payment on the invoice.
  
  

Multi-templates (All channels)

These placeholders display the total of any fees or discounts across all invoices included in the chaser:

• Invoice: Early payment discount - aggregate – Shows the combined discount total across all invoices.

Multi-templates (Email and letter only)

If you’re using a multi-template with a table layout, you can include an extra column that shows the specific fee (positive) or discount (negative) for each invoice:

• Invoice: Table with fees – This will add a column to the multi-invoice table to show individual invoice fees or discounts.
  
  

These placeholders help ensure your debtors clearly understand what they owe—and what they can save by paying early to secure a discount.

Early payment discount calculations for Xero invoices

For tax-exclusive invoices, where amounts are entered before tax, the early payment discount is applied to the subtotal first. Once the discount is applied, tax is then calculated on the reduced amount. For example, if the subtotal is £100 and the tax rate is 20%, a 10% early payment discount would reduce the subtotal to £90. Tax is then calculated on this amount (£90 × 20% = £18), making the total payable £108 if paid early.

For tax-inclusive invoices, where the amount already includes tax, the early payment discount is applied to the full total. The discounted amount is then split proportionally between the net and the tax components. For example, if the invoice total is £100 (which includes 20% VAT), a 10% early payment discount reduces the total to £90.

For invoices with no tax, where either the tax rate is 0% or tax doesn’t apply, the early payment discount is simply applied directly to the full amount. For example, if the invoice is for £100 and the discount is 10%, the customer would pay £90 if they pay early.

Early payment discount calculations for email notifications

As Chaser is not aware of the tax rate, and cannot apply this, it is important that you consider the tax when selecting the percentage that you would like to charge. You will need to consider whether your invoices are tax-inclusive or tax-exclusive. If your invoices are tax-exclusive, enter your desired fee into Chaser. If your invoices are tax-inclusive you can calculate the fee to add in Chaser using the following calculation

If you select the option to edit invoices in Xero, Chaser will consider the tax using the tax rate and tax application method that you enter.

Related article

• Notifications
• Schedules
• Payment portal