71 Set Up Payment Terms

This chapter contains these topics:

• Section 71.1, "Setting Up Net Payment Terms for A/R"

• Section 71.2, "Setting Up Net with Discount Payment Terms for A/R"

• Section 71.3, "Setting Up Proximate Date Payment Terms for A/R"

• Section 71.4, "Setting Up Due Upon Receipt Payment Terms for A/R"

• Section 71.5, "Setting Up Split Payment Terms for A/R"

You can set up codes for various payment terms, which determines the discounts and discount due dates for your invoices. This makes entering your invoices more efficient.

When entering a customer master record, you may specify the payment terms that the customer uses most frequently. Then when you enter an invoice, you can either:

• Accept the default payment terms

• Designate different payment terms

A payment terms code uses a one, two, or three-character combination of the following:

• Alphabetic (A-Z)

• Numeric (1-999)

• Special characters (including blank)

Set up blank codes for the most commonly used payment terms. If you do this, also set up a non-blank code for the same payment terms in case you need to override a customer's payment terms to these terms later

For example, you have a customer with a payment terms code of D (due upon receipt), and you change the terms of the invoice to net 30 days. Because you cannot replace the existing code of D with a blank, you must use a non-blank code, such as N for net 30 days.

Figure 71-1 Payment Term Revisions screen

Description of ''Figure 71-1 Payment Term Revisions screen''

Information about payment terms is stored in the Payment Terms table (F0014).

Navigation

From Accounts receivable (G03), enter 29

From Accounts Receivable Setup (G0341), choose Payment Terms Revisions

71.1 Setting Up Net Payment Terms for A/R

You might allow a customer a specific number of days to pay an invoice. When you enter an invoice, the system calculates the net due date by adding the number of days to the invoice date.

For example, if the net days to pay is 30, and the invoice date is June 14, the due date is July 14.

To set up net payment terms for A/R

1. On Payment Terms Revisions, complete the following fields:

   • Payment Terms

   • Net Days to Pay

2. Complete the following optional field:

   • Description

3. Click Enter.

Field	Explanation
Payment Terms	A code that specifies the terms of payment, including the percentage of discount available if the invoice is paid within a certain amount of time. A blank code usually indicates the most frequently used payment term. You define the specifications for each type of payment term using the Payment Terms Revisions program (P0014). For example: blank – Net 15 1 – 1/10 net 30 2 – 2/10 net 30 N – Net 30 P – Prox 25th Z – Net 90 This code prints on customer invoices.
Net Days to Pay	The number of days allowed for payment. This field works in conjunction with the Discount Days field. For example, Payment Terms of 2/10 net 30 indicates that the customer has 10 days to pay and receive a 2% discount, or pay the full amount within 30 days (net 30). Payments after 30 days are delinquent. This is also the number of days after the invoice date when the first split payment is due, if the customer is using that option.
Description	The text that describes the payment terms code. You can print this text on the invoice, for example, 2/10, net 30 Prox 25.

71.2 Setting Up Net with Discount Payment Terms for A/R

To encourage early payment, you might allow a discount if the customer pays an invoice within a certain number of days. The system calculates the discount due date by adding the invoice date to the number of discount days.

For example, if an invoice has a discount of 1%, discount days of 10, and net days to pay of 30, the payment terms allow a 1% discount if the customer pays the invoice within 10 days of the date of the invoice. If the invoice is not paid, the customer has 30 days to pay the net amount.

To set up net with discount payment terms for A/R

On Payment Terms Revisions

Figure 71-2 Payment Term Revisions (Discount) screen

Description of ''Figure 71-2 Payment Term Revisions (Discount) screen''

1. Complete the following fields:

   • Payment Terms

   • Discount %

   • Discount Days

   • Net Days to Pay

2. Complete the following optional field:

   • Description

3. Press Enter.

Field	Explanation
Discount Percent	The percent of the total invoice that will be discounted if the invoice is paid within the discount period. This is entered as a decimal, for example, a 2% discount is .02.
Discount Days	A number indicating how many days after the invoice date that the discount is available. The system uses this number to compute the discount due date.

71.3 Setting Up Proximate Date Payment Terms for A/R

You might specify when an invoice is due by indicating the proximate, or subsequent month and day. The system calculates the month that the invoice is due by adding the proximate month to the month of the invoice. The proximate day is the date in that month.

For example, if an invoice date is May 20, the proximate month is 1, and the proximate day is 10, the payment would be due on June 10.

To set up proximate date payment terms for A/R

On Payment Terms Revisions

Figure 71-3 Payment Term Revisions (Proximate Date) screen

Description of ''Figure 71-3 Payment Term Revisions (Proximate Date) screen''

1. Complete the following fields:

   • Payment Terms

   • Proximate Date Month

   • Proximate Date Day

2. Complete the following optional field:

   • Description

3. Press Enter.

Field	Explanation
Proximate Date Month	This field represents the month increment of the proximate due date. For example, a proximate date of 01/15 indicates that the payment is due on the 15th of next month. A proximate date of 03/10 means the payment is due three months hence on the 10th.
Proximate Date Day	This field represents the day increment of the proximate due date. For example, a proximate date of 01/15 indicates that the payment is due on the 15th of next month. A proximate date of 03/10 means the payment is due three months hence on the 10th.

71.4 Setting Up Due Upon Receipt Payment Terms for A/R

You might expect payment from a customer upon receipt of an invoice. For the payment terms of due upon receipt, the system sets the due date equal to the invoice date.

For example, if the invoice date is June 10, the due date is June 10. If no invoice date is specified, the system uses the G/L date.

To set up due upon receipt payment terms for A/R

On Payment Terms Revisions

Figure 71-4 Payment Term Revisions (Due Upon Payment) screen

Description of ''Figure 71-4 Payment Term Revisions (Due Upon Payment) screen''

1. Complete the following field:

   • Payment Terms

2. Complete the following optional field:

   • Description

3. Leave the following fields blank:

   • Due Date

   • Net Days to Pay

4. Press Enter.

71.5 Setting Up Split Payment Terms for A/R

Instead of a customer paying the entire amount of an invoice, you might arrange for an invoice to be paid with equal, consecutive payments. To do this, set up split payment terms. You can do this only if the number of days between payments is a constant number, such as 30.

For example, an invoice has a date of July 1, two equal payments are due, and the number of days between payments is 30. In this case, the first payment is due July 31, 30 days from the invoice date. The second payment is due August 30, 30 days from the first payment due date.

If you allow the customer a discount, the entire discount applies to the first pay item.

To set up split payment terms for A/R

On Payment Terms Revisions

Figure 71-5 Payment Term Revisions (Split Payment) screen

Description of ''Figure 71-5 Payment Term Revisions (Split Payment) screen''

1. Complete the following fields:

   • Payment Terms

   • Net Days to Pay

   • Number of Split Payments

   • Days to Pay Aging

2. Complete the following optional field:

   • Description

3. Press Enter.

Field	Explanation
Number of Split Payments	The number of equal, consecutive payments that the system divides the invoice into. For example, if the payment terms are 1/3, 1/3, 1/3 due in 30, 60, 90 days, respectively, the number of split payments is 3. Days to pay aging, then, is 30. You can use split payments only if the number of days between payments is a constant number, such as 30.
Days to Pay Aging	The number of days that the system uses to calculate the due date for each payment if you are using split payments. For example, if the payment terms are 1/3, 1/3, 1/3 due in 30, 60, and 90 days, respectively, the number of split payments is 3, and the days to pay aging is 30 (30 days between payments). You can use split payments only if the number of days between payments is a constant number, such as 30.