What is an efficient method for tracking payment discounts lost? Discounts earned is easy - it can be tracked in the General Ledger. I'm stumped on tracking discounts lost.


The answer to your question depends on the type of technology available to you either within your accounting system or as an add-on module. If your system is able to track the discount taken on each check run then you may consider organizing your payment runs where you pay only those vendors that offer discounts in a separate run. In other words you isolate the vendors offering discounts so that after the check run you could determine the amount of payments that you did not take a discount.

Based on the discount offered you could calculate both the dollars missed and percentage of discounts lost. Another option is either to structure your general ledger chart of account in a manner that allows you to isolate the vendors whom you miss a discount or use an Excel spreadsheet and track lost discounts for a certain period of time. If you sample transactions from a population using a statistically significant process then you can extrapolate your results across those vendors who offer discounts.

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