In Business Central, policy drives posting. This guide ensures discounts post only when intended, with clear steps to prevent, detect, and correct concessions.

When a customer pays in full on or before the discount date, Business Central quietly tries to “help” by posting a discount concession. Helpful…until it isn’t. This guide shows the practical, least-click path to stop unintended discount postings, fix prior applications, and align your entries with policy and ASC 606. You’ll see exactly where BC infers a concession, how to clear Remaining Pmt. Disc. Possible when you intend to take no discount, and when to use warnings for judgment calls. The goal: cash hits the bank, A/R clears cleanly, revenue stays truthful. That’s the Righter Way with fewer surprises, better controls, and audit-ready receipts.

Key behavior

Applying payment in full on or before the Payment Discount Date auto-posts a discount with no warning: Debit Sales Payment Discount / Credit A/R in addition to Debit Bank.

Post entries with and without discount when paid in full

Figure 1General Ledger Setup – Application FastTab

General Ledger Setup (Figure 1) controls how entries with discounts are applied and if automatically, however it is still the responsibility of the person applying payments to invoices to make the correct decisions when payments are received and not “in compliance” with the payment terms. Here we will focus on what happens When applying payment in full (no discount taken) on or before Payment Discount Date.

1. When payment is applied without clearing the amount in Remaining Pmt. Disc. Possible on the invoice’s customer ledger entry, the application creates entries to the payment discount account and balances it to the AR account. The bank account (cash) is posted with the receipt amount. You can see the value that posts in Payment Disc. Amount in totals prior to posting (Figure 2).

Figure 2 Remaining Pmt. Disc. Possible has value. Totals reflect discount applied.

• When payment is applied after clearing Remaining Pmt. Disc. Possible (Figure 2) on the invoice’s customer ledger entry, no discounts post. Confirm there is no value in Payment Disc. Amount (Figure 3) prior to posting.

Figure 3 Possible discount amount value cleared. Totals do not reflect discount.

Fixing “bad” payment applications

To fix payment applications that have been posted with discount concessions:

1. Go to Customer Ledger Entries.
2. Find the payment entry that posted the discounts on application. From the entry go to Unapply Entries to “disconnect” the payment from the invoice.

Figure 4 Unapply Payment from Invoice in Customer Ledger Entries

• Respond Yes to the prompt (Figure 5). Only correcting entries for the application will be posted (Figure 6). The entries related to AR and cash for the deposit are unaffected. This is what you want.

Figure 5 Message to continue posting correcting G/L entries for the undo of the application entries.

Figure 6 G/L entries from reversing application in Customer Ledger Entries.

• From payment entry, select Apply Entries. Set Applies-to ID on the invoice’s customer ledger entry. Clear Remaining Pmt. Disc. Possible on this entry. Confirm the amounts in the application totals prior to posting. There should be no value in Payment Disc. Amount (Figure 7).
• Post Application. No G/L entries post with this application.

Figure 7 No Discount Amt. for application.

More on posting discount amounts

Figure 8 General Ledger Setup

What BC does by default (no warning): When tolerances are non-zero, if the payment is applied on or before the Payment Discount Date (and also if it’s late but within the defined grace period), BC auto-posts the discount as a Payment Discount Tolerance even when you apply the full invoice amount. Resulting G/L entries for the payment application: Debit Sales Discounts (Payment Discount) + Credit A/R.

GAAP basis for discount entries

The entry records a sales discount (contra-revenue) under ASC 606 as a price concession granted at collection.

If you have assigned Payment Tolerance % or Max. Payment Tolerance Amount, your setup (grace + tolerance) signals BC that late discounts are normally honored; BC books Dr Sales Discounts / Cr A/R while Bank stays at cash received. Non-zero tolerances tells BC you routinely honor late discounts → it books a price concession at application closing the invoice and reducing revenue per ASC 606 (price concession). Default behavior is to “Post as Payment Discount Tolerance.”  Unique G/L accounts can be assigned when posting debits vs. credits. These are defined in General Posting Setup.

Figure 9 General Posting Setup for discounts.

• These additional entries may not be required if your policy is strict terms/no late discounts or discounts are not customary/material and you don’t have to recognize a concession at collection. You just want to clear A/R with the full payment.

Stopping automatic payment discount entries

If you don’t want a concession to be recognized automatically, you must remove the tolerance path or force a user choice. You have two options.

1. Lock it down (no tolerance): Set Payment Discount Grace Period = 0D, Payment Tolerance % = 0.00, Max Tolerance Amount = 0.00. Then BC never infers a discount; to take one, users must apply the exact net. To decline, apply full.
2. Keep flexibility but control it (recommended): When Payment Tolerance % and Max Payment Tolerance Amount are required, enable the Payment Discount Tolerance Warning. This allows user to select what to do on posting an application after the Discount Date but within Grace. Turn Payment Discount Tolerance Warning = On. This allows users to decide how to apply discounts when no changes are made to the Remaining Pmt. Disc. Possible in customer ledger application:

Figure 10 General Ledger Setup for warnings.

2. Full cash after discount date → select “Do Not Accept the Late Payment Discount.” (label may say “late,” but use it to decline the concession). No discount G/L line is created.

Figure 11 Discount Tolerance Warning

2. Late but approved discount → select “Post as Payment Discount Tolerance.” This keeps postings aligned with an ASC 606 revenue policy.
3. Discount taken on or before the Payment Discount Date and you apply exactly the net amount (invoice − discount) → no warning. BC treats it as a normal payment discount and posts the discount automatically to your Sales Payment Discount (contra-revenue) account. The Bank = cash received; A/R is credited for the full invoice.

Flexibility by Design

The Payment Discount Tolerance Warning provides the most flexibility and is designed to prompt you for late (after discount date but within grace) discount and on-time (full payment within discount due date) decisions. On-time discounts are expected under terms, so BC books them without a prompt when the applied amount is equal to the net.

Edge cases:

1. Short/over by a few cents (within Payment Tolerance): You may get a Payment Tolerance warning (separate from discount tolerance) asking to write off the tiny difference. If accepted, BC posts a small tolerance entry in addition to the discount.
2. You want a prompt even on-time: Set Payment Discount Grace Period = 0D and keep tolerances = 0.00. Then there’s no auto discount; clerks must apply exact net to take it (or full to decline).
3. You want to block automatic discounts entirely: Set Payment Tolerance % = 0.00, Max Tolerance Amount = 0.00, and Grace = 0D. Only exact full or exact net will close—no prompts, no inference.

In conclusion, the automatic posting of payment discounts in Business Central (BC) can be managed effectively by adjusting the General Ledger Setup. By setting the Payment Discount Grace Period, Payment Tolerance Percentage, and Maximum Tolerance Amount to zero, you can prevent BC from inferring discounts automatically. Alternatively, enabling the Payment Discount Tolerance Warning allows users to decide how to apply discounts, providing flexibility while maintaining control. These adjustments ensure that your revenue recognition aligns with your company’s policies and ASC 606 standards.

Wrap-up—make BC match your policy

Lock down tolerances when discounts aren’t customary. Turn on the Payment Discount Tolerance Warning when controlled flexibility is needed. Clear Remaining Pmt. Disc. Possible before you apply payments you don’t intend to discount, and unapply/reapply to correct history without touching cash. Small habit, big accuracy. Document your policy, train to the clicks, and spot-check postings monthly. Keep revenue recognition boring—in the best way. That’s Sharing the Righter Way™.