Why the PO Date Matters for Early Payment Discounts
Early Payment Discounts (EPDs) help VCU stretch its purchasing dollars by allowing certain vendors to accept slightly reduced payments in exchange for faster payment than the standard 35-day terms. The program usually runs smoothly, but questions often arise during vendor transitions—when a vendor is added to or removed from the program.
EPD terms follow the PO, not the calendar
Changes to a vendor’s EPD arrangement apply only to new purchase orders going forward. Existing POs retain the terms they were created with; no PO is updated retroactively. This creates a natural transition window where old and new POs coexist under different terms.
How this works in practice
- New vendor added to EPD: Only POs created after enrollment carry the discount. Existing open POs remain at full value. Departments may choose to replace older POs if they want to take advantage of the new terms immediately.
- Vendor exits EPD: Existing POs keep the discount until closed; only new POs reflect the non-discounted terms. Replacing old POs is the way to get a clean break.
Discounts already applied cannot be reversed, nor can they be applied retroactively to previously paid invoices.
Encumbrance cleanup during transition
As discounted invoices are paid against older POs, small encumbrance balances may remain. A monthly script in Banner usually clears these automatically, but manual Journal Vouchers may occasionally be needed.
Questions about a specific vendor or PO?
Check the “Early Payment Discount Vendors” link on the RealSource homepage. For questions about a specific vendor or to enroll a vendor, contact Purchasing.
More details are available on the Early Payment Discounts page of the Procurement Services website.
Categories Procurement Services