How is a prompt payment discount typically displayed on an invoice?

A prompt payment discount is designed to encourage timely payments, and it is typically applied to the invoice total after other discounts have already been deducted. This means that the discount amount is calculated based on the reduced amount that reflects any preceding discounts or adjustments.

This approach ensures that the prompt payment discount is only applied to the actual amount that needs to be paid, providing clarity and fairness in calculating total liabilities. By doing this, the company can incentivize prompt payments while also maintaining transparent pricing practices. In practice, this means if there are other discounts applied to the invoice, those should first be deducted before calculating the prompt payment discount, leading to a more accurate reflection of the total payable amount.