Payables uses payment terms you assign to an invoice to pay invoices at a discounted rate. You define discount payment terms in the Payment Terms window. You can define discount payment terms that have Payables vary the discount amount depending on how old the invoice is. You also define the payment terms to pay the full invoice amount if you have missed the discount date. For example, you can define payment terms to take a 10 percent discount if the invoice is paid within 5 days of the Terms Date, or a 5 percent discount if the invoice is paid within 10 days. If the invoice is over 10 days old, Payables pays the full invoice amount on the due date you specify.
When you submit Approval for an invoice with discount terms, Payables automatically creates a scheduled payment, which includes a discount date and discount amount. If you enter an invoice that does not have discount terms, you can modify the scheduled payment to include a discount.
You use Pay Date Basis and Always Take Discount to control whether you take a discount and when you pay an invoice. There are two key ways to take discounts with Payables:
- Enable the Always Take Discount Supplier option. Payables takes a discount regardless of when you pay the invoice.
If you take a discount, Payables uses the Discount Distribution Method you specify in the Payables Options window to credit the appropriate accounts.
- Select Discount for the Pay Date Basis for the supplier, and disable the Pay Only When Due check box for your payment batch. Payables takes a discount and pays the invoice within the discount period.
PREPAYMENTS: You cannot take discounts on prepayments.
BANK CHARGES: You cannot use the Discount feature if you enable the Use Bank Charges Payables option.
Scheduling Invoice Payments
Scheduled Payments Window Reference