Vendors, lending institutions, corporations, banks, and many other organizations that utilize or make payments often institute discount programs or payment forgiveness based on the timeliness of payments. Calculating discount proration from payment date is important to determine the impact of these discounts.
In this recipe, you will learn to calculate a quarterly discount proration based on the payment date.
The proration to be used in this recipe will be a $3 reduction from $400 for every day early paid before the final due date of 1/31/2010. The timeline utilizes days to clearly show the function of this recipe.
Set up your worksheet like the following table:
