Payment Methods and Discount Analysis

Different payment methods have different business implications. Bank transfers are cheap to process but slower. Credit cards are fast but carry processing fees (typically 1.5-3%). Checks are cheap but risky (can bounce). Understanding your payment method mix and how early payment discounts affect collection behaviour helps treasury and finance optimise working capital.

Why Payment Method Analysis Matters

For a finance team, payment method data answers:

• Cost analysis: If 60% of payments come by credit card at 2.5% processing fee, that's a significant cost
• Speed analysis: Which methods result in faster payments? (Bank transfers vs. checks)
• Risk analysis: Which methods are most likely to fail or bounce?
• Discount effectiveness: Do early payment discounts actually change behaviour?

Payment Method Performance

This query computes the full performance profile of each payment method — volume, value, and timing relative to due dates.

SELECT
    p.method,
    COUNT(*) AS payment_count,
    COUNT(DISTINCT p.invoice_id) AS invoices_covered,
    ROUND(SUM(p.amount), 2) AS total_amount,
    ROUND((AVG(p.amount))::NUMERIC, 2) AS avg_payment_size,
    ROUND(SUM(p.amount) / SUM(SUM(p.amount)) OVER () * 100, 1) AS pct_of_total_cash,
    -- Timing: days from due date (negative = early, positive = late)
    ROUND((AVG(p.payment_date - i.due_date))::NUMERIC, 1) AS avg_days_from_due
FROM payments p
JOIN invoices i ON i.invoice_id = p.invoice_id
GROUP BY p.method
ORDER BY total_amount DESC;

What This Returns

avg_days_from_due is the key timing metric: negative means this payment method tends to arrive before the due date (clients paying early tend to use bank transfer, often), positive means late. pct_of_total_cash shows the payment method's share of collected revenue — useful for estimating total processing costs (multiply credit_card share by your processing fee rate).