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Early payment discounts for Xero invoices

Xero has no early payment terms, also called prompt payment or settlement discounts. Paidnice adds the discount to new invoices and takes it off when the window closes.

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Early payment discounts in Xero, and with Paidnice

Xero lets you type a discount in. Paidnice applies it and removes it on your schedule.

The discount is typed into each invoice manually.The discount line is added on its own to the new invoices you choose.
If the customer pays late, someone edits the invoice or raises a credit note.The discount comes off when the window closes, and the invoice goes back to its full total.
The customer is not told what they save.An email can show the saving, with a pay link at the discounted total.

DiscountsInvoices

Discount columnPercent or amount, typed in

Early payment termsNot available

After the windowEdit the invoice or raise a credit note

Not availableA discount that applies itselfRemoval when the window closesAn email that shows the saving

How to give an early payment discount in Xero

Xero has a discount column but no early payment terms, so each discount is added and removed manually. For more detail, see our guide to early payment discounts in Xero.

Built-in early payment discounts in XeroSource: Xero Central: Add a discount to a transaction ↗

Open the invoice. If there is no Disc column, click Columns and tick Discount.
Enter the discount as a percent of the line or as an amount, and write the offer in the invoice terms.
Approve and send the invoice.
If the customer pays after the window, edit the invoice to remove the discount, or raise a credit note if the period is closed.
Repeat for each invoice that gets the offer.

Why: the Xero idea “Prompt Payment / Settlement Discount” has 416 votes since 2013. In May 2026 Xero said it is not on the roadmap.

Or let Paidnice run it

Connect Xero
Set the rate and the window
Switch it on for new invoices

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An early payment discount that runs itself in Xero

The discount is a real line on the Xero invoice, so your customer, your ledger and your reports all see the same amount.

A discount line on each new Xero invoice

Choose a percent or a fixed amount. The line goes on the invoice in Xero, posted to its own account and tax rate, and its description can show the expiry date.

Gone when the window closes

If the invoice is still unpaid when the offer ends, the discount line comes off and the invoice returns to its original total in Xero. Nobody edits it manually.

Your rate, your window, your customers

Choose how recent an invoice must be to qualify and when the discount ends, counted from the issue date or the due date. Apply it to every new invoice, or only to invoices not yet sent.

Show the saving, with a link to pay

An optional email tells the customer the amount, the expiry and the discounted total, with a pay link. It is off until you switch it on.

Keep some items at full price

Exclude line items from the discount, so chosen revenue such as pass-through costs is never discounted.

The accounts receivable toolkit for Xero

Every tool you need to get paid on time, running on your live Xero invoices. Connect once and switch on what you need.

Early payment discounts in Xero: questions

Can Xero apply an early payment discount automatically?

No. Xero has a discount column on invoices, but no early payment terms. The discount is typed in, and removed manually if the customer pays late. Paidnice adds the discount line to new Xero invoices and takes it off when the window closes.

What is the difference between an early payment, prompt payment and settlement discount?

They are the same offer: a smaller amount due if the customer pays within a short window. "Settlement discount" is the usual UK term. Paidnice calls it a prompt payment discount in the app.

How does the discount show in Xero?

As its own line on the invoice, posted to the account and tax rate you choose. The line description can carry the expiry date. When the window closes, the line comes off and the invoice returns to its original total.

Can I offer the discount on some customers or items only?

Yes. Choose which new invoices qualify, and exclude line items, so chosen revenue is never discounted.

Does the discount apply to invoices I have already sent?

A new policy applies to new invoices, or to invoices not yet sent from Xero. One older invoice can be processed manually.

Will the customer know about the discount?

You can send an email when the discount is applied, with the amount, the expiry and a pay link at the discounted total. It is off by default.

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Offer early payment discounts in Xero

Connect Xero, set your rate and window, and approve the policy. Nothing changes until you switch it on.