22 Work with Payment Terms
This chapter contains these topics:
22.1 Working with Payment Terms
You use payment terms to ensure that both the seller and the buyer agree on when a payment is due for goods or services rendered. Payment terms can range from simple to complex, depending on the policy of your organization. For example, you might set up a simple payment term, such as 1/10, net 30, to encourage early payment. You might also set up a more complex payment term to allow an invoice or a voucher to be split into multiple payments with a different discount percentage for each payment.
Working with payment terms consists of the following tasks:
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Setting up due-date rules
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Setting up workday calendars (optional)
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Setting up payment-term codes
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Setting up installment payments (optional)
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Working with payment terms for multi-tiered discounts (optional)
Payment terms provide you with the flexibility to define how the system calculates due dates and discount percentages for your invoices and vouchers. A due date can either be a net due date or a discount due date. Because of the complex and diverse ways of calculating due dates, you can set up due-date rules using various components to calculate a due date. For example, you can specify that the system add 10 days to the based-on date, which might be the G/L date, when calculating the discount due date of an invoice.
After you set up due-date rules for both the net due date and the discount due date, you set up the payment-term code. You can specify a due-date rule as either a discount due date or a net due date. This enables you to link the rules with a discount percent to define the:
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Default payment-term code for a customer or supplier
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Payment-term code of a specific invoice or voucher
The system stores payment-term information in the following tables:
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Advanced Payment Terms (F00141)
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Due Date Rules (F00142)
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Due Date Rules Day Range (F00143)
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Installment Payment Terms (F00144)
22.2 Setting Up Due-Date Rules
From Accounts Receivable (G03), enter 29
From Accounts Receivable Setup (G0341), choose Payment Terms Revisions
From Payment Terms Revisions (G00141), choose Due Date Rule Revisions
Before you set up specific payment terms, you must define the rules that the system uses to calculate due dates for invoices and vouchers. You can set up as many due-date rules as necessary.
A due-date rule can consist of any of the following components:
| Component | Explanation |
|---|---|
| Based-on Date | This can be an invoice date, G/L date, a service tax date, and so on. |
| Days to Add | This is the number of days that the system adds to the based on date. |
| Months to Add | This is the number of months that the system adds to the based on date. |
| Fixed Date | This is the same date every month, such as the 10th or 15th of each month. |
| Date Range | This is a range of days that the system uses in conjunction with other components. |
| Workday Day Calendar | This is a calendar that you can use to ensure that the due date is on a work day. |
| Workday Day Rule | This is a rule that you can use to ensure that, if a due date is on a non-work day, the system ignores the date classifications or moves the date forward or backward to an actual working day. It also determines whether to count non-work days when calculating the due date. |
By using a combination of these components, you can set up various payment terms. For example, you might set up due-date rules as follows:
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Use the invoice date as the based-on date and add one month. For example, if the date of the invoice is June 25th, the due date is July 25th.
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Use the G/L date as the based-on date and add one month and five days. For example, if the G/L date is June 12th, the due date is July 17th.
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Use the G/L date as the based-on date, set up a date range, and specify a number of days to add to the date range and a month to add. For example, if the G/L date is June 2nd, the month to add is 1, and the date ranges are:
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The 1st through the 10th, add 5 days
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The 11th through the 31st, use the 31st as the fixed date
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Since the based-on date is within the first date range, the system adds five days and one month to the last day in the day range. Therefore, the due date for the payment is July 15th. This is commonly known as a "swing payment term" and is most often used in Germany.
On Due Date Rule Revisions
Figure 22-1 Due Date Rule Revisions screen
Description of "Figure 22-1 Due Date Rule Revisions screen"
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Complete the following fields:
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Date Rule
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Description
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To define how the system calculates the due date, complete any of the following fields:
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Based on Date
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Months to Add
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Days to Add
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Fix Days to Use
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To specify information about a work day calendar, complete the following fields:
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Calendar
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Work Day Rule
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To set up a date range as part of your due date rule, choose the Date Range option next to the rule.
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On Date Range Setup, complete the following fields:
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From Day Range
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To Day Range
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Complete the following optional fields and press Enter:
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Add Months
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Add Days
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Fixed Days
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Choose the Update function to update and redisplay the due date rule.
Field Explanation Date Rule The due date rule that the system uses to determine the installment due date of an invoice. You define due date rules on the Due Date Rule Revisions screen. Description A user defined name or remark. Use this field to describe the customer or class of customers who will use the execution list.
Based on Date The initial date from which the net due date and discount due date is calculated. NOTE: The based on date attached to the net due date rule and the discount due date rule is applicable for the first installment only for installment payment terms. Each subsequent installment will use the previously calculated net due date as the basis for calculating the next due date.
Months to Add This field indicates the number of months to add to the based on date to determine the net due date or the discount due date. Days to Add This field indicates the number of days to add to the based on date to determine the discount or net due date. Fixed Days This indicates the fixed day which will be used during the date calculation. Calendar The calendar name to be used in work day calculations. It will be validated against the Work Day file (F0007). Work Day Rule A code that controls how the system determines the due date when the due date falls on a non-working day. The work day rule operates in conjunction with the fixed days, add days, and date range. Valid values:
blank When calculating the due date, use actual days. Ignore day classifications, such as working day, weekend, and holiday.
1 When calculating the due date, omit non-working days. If the due date falls on a non-working day, move the due date forward to the next working day.
2 When calculating the due date, use actual days. If the due date falls on a non-working day, move the due date forward to the next working day.
3 When calculating the due date, do not omit non-working days. If the due date falls on a non-working day, move the due date back to the last working day.
From Day This field indicates the lower value of a day range. The allowable values are 1 to 31. This must be lower than the To Day value. To Day This field indicates the upper value of a day range. The allowable values are 1 to 31. This must be greater than the From Day value.
22.2.1 What You Should Know About
22.3 Setting Up Workday Calendars
From Accounts Receivable (G03), enter 29
From Accounts Receivable Setup (G0341), choose Payment Terms Revisions
From Payment Terms Revisions (G00141), choose Work Day Calendar
When setting up due-date rules for your payment terms, you can set up workday calendars. These calendars enable you to specify the actual workdays, weekends, holidays, and so on of your organization. You can set up multiple calendars and reference the name of one in the due-date rule.
After you set up a workday calendar, you specify which action to take if the system calculates the due date on a non-workday. You do this on the Due Date Rule Revisions screen. For example, you can instruct the system to:
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Ignore non-workdays when counting the days to calculate the due date and not allow the due date to occur on a non-workday.
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Use the workday after the calculated due date as the due date. For example, if the calculated due date occurs on the weekend, the system moves the due date to the following Monday.
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Use the workday before the calculated due date as the due date. For example, if the calculated due date occurs on the weekend, the system moves the due date to the previous Friday.
If you specify a workday rule, you can adjust the payment's due date to correspond with your workdays. For example, you can prevent unintended "grace periods" that might occur if the due date falls on a Saturday and your business is closed. In addition, you can specify that the payment is due in 30 workdays instead of 30 calendar days.
On Work Day Calendar
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Complete the following fields:
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Branch
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Calendar Year
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Calendar Month
The calendar for the month and year displays twice. The left portion of the screen shows the numerical days, and the right portion of the screen shows the work days and non-work days.
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In the right portion of the screen, change the default values as necessary for each day of the week.
22.3.1 What You Should Know About
| Option | Explanation |
|---|---|
| Specifying the type of day | Some examples of the type of day you can specify on the calendar are as follows:
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| The Work Day Calendar program (P00071) | The Work Day Calendar program is a Manufacturing system program. On the Work Day Calendar screen, the Branch field refers to a Branch/Plant (business unit). Instead, it refers to the name that you assign to the work day calendar for your due date rules.
Therefore, when you set up a work day calendar, the system accesses it from the Work Day Calendar file (F0007), not the Business Unit File (F0006). |
See Also:
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Section 22.2, "Setting Up Due-Date Rules" for information about specifying workday rules.
22.4 Setting Up Payment-Term Codes
From Accounts Receivable (G03), enter 29
From Accounts Receivable Setup (G0341), choose Payment Terms Revisions
From Payment Terms Revisions (G00141), choose Advanced Payment Terms
You can set up codes for various payment terms, which determines the net due dates, discounts, and discount due dates for your invoices and vouchers. This makes entering invoices and vouchers more efficient.
When you enter a customer or supplier record, you specify the payment-term code that the customer or supplier uses most frequently. Then, when you enter the invoice or voucher, you can do either of the following:
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Accept the default payment-term code
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Designate a different payment-term code
22.4.1 About Payment Term Codes
When you set up a payment-term code, you can use a one-, two-, or three-character combination of the following:
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Alphabetic (A-Z)
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Numeric (1-999)
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Special characters (including blank)
You should set up a blank code for the most commonly used payment terms. If you do this, you must also set up a non-blank code for the same payment terms in case you need to change a supplier's payment terms later.
For example, you have a supplier with a payment-terms code of D (due upon receipt). The supplier changes the terms to net 30 days, which is set up as a blank code. 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.
22.4.1.1 Before You Begin
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Set up the necessary due-date rules that the system uses to calculate net due dates and discount due dates. This enables the system to link the rule to a specific payment term. See Section 22.2, "Setting Up Due-Date Rules."
On Advanced Payment Terms
Figure 22-4 Advanced Payment Terms screen
Description of "Figure 22-4 Advanced Payment Terms screen"
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Complete the following fields:
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Payment Term
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Description (optional)
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To attach a due date rule to the payment term, complete the following fields:
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Net Due Date Rule
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Discount Due Date Rule
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To specify a discount percentage for the invoice, complete the following field:
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Discount Percentage
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 on the Payment Terms Revisions screen. For example: blank Net 15
1 1/10 net 30
2 2/10 net 30
N Net 30
P Fixed day of 25th
Z Net 90
This code prints on customer invoices.
Description - Payment Terms The text that describes the payment terms code. You can print this text on the invoice, for example, 2/10, net 30, fixed day 25. Net Due Date Rule The due date rule that the system uses to calculate the net due date of an invoice installment. You define net due date rules on the Due Date Rules Revisions screen. Discount Due Date Rule The due date rule that the system uses to calculate the discount due date of an invoice. This is similar to a discount due date payment term. You define the discount due date rule on the Due Date Rules Revisions screen. Disc Perc 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. -
22.5 Setting Up Installment Payments
From Accounts Receivable (G03), enter 29
From Accounts Receivable Setup (G0341), choose Payment Terms Revisions
From Payment Terms Revisions (G00141), choose Installment Payment Revisions
Instead of a customer or you paying all of an invoice or voucher at one time, you can arrange installment payments. You can set up installment payment terms to pay an invoice or voucher with multiple payments over a specified period of time.
When you set up installment payment terms, you can set up equal payments or unequal payments with different percentages. You can also specify a different discount percent for each installment. The system calculates the due date of each installment based on the due date rule you assign to it.
The following describes two examples of installment payment terms:
| Example | Explanation |
|---|---|
| Equal payments with a discount due date | You might set up five equal payments. Each payment includes a 10 percent discount if paid within the discount period that you defined in the discount due date rule.
The actual due date of the payment depends on the net due date rule that you set up. |
| Unequal payments with a discount due date | You might set up 6 payments. Five of the payments might be 15 percent of the invoice amount, and the sixth payment is 25 percent. Each payment might also include a 5 percent discount if paid within the discount period that you defined in the discount due date rule.
The actual due date of the payment depends on the net due date rule that you set up. |
To set up installment payments
On Installment Payment Revisions
Figure 22-5 Installment Payment Revisions screen
Description of "Figure 22-5 Installment Payment Revisions screen"
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Complete the following fields:
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Payment Terms
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Description (optional)
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To set up equal installment payments with the same due date rules, complete the following fields in the header area:
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Number of Equal Payments
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Discount Percent
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Discount Due Date Rule
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Net Due Date Rule
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To set up unequal installment payments or to apply different due date rules, complete the following fields for each installment in the detail area:
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Sequence Number
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Percent of Installment
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Discount Percent
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Discount Due Date Rule
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Net Due Date Rule
Field Explanation No. of Equal Payments This field indicates the number of equal installments to be initially generated by the system. Using default values, the system uses this fast path method to create equal installments. Discount Percent The default value for 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. Note, this field is only available the first time that installments are entered for a payment term. It is the value which will initially be replicated for the generated installments. Disc. Due Date Rule The default value of the discount due date rule that the system uses when generating equal installments. Note: This field is only available for use when first generating new equal installments for a payment term.
Net Due Date Rule The default value for the Net Due Date rule when generating equal installments. Note, this field is only available for use when first generating new equal installments for a payment term. Sequence Number A number used to organize the file into a logical group for online viewing and reporting. Percent of Installment The percentage of the invoice that is going to be split to generate one installment. The total of all installments must add up to 100.00 % of the invoice total amount. This is different than the split payment concept where the split is a fixed percent. Here you create installments using variable percentages. If the percent of the installment is 20%, you enter it as 20. 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. -
22.6 Working with Payment Terms for Multi-Tiered Discounts
You can set up payment terms that allow for multiple discount percentages for invoices or vouchers. For example, you might set up a payment term that allows your customer to receive a 20 percent discount on their invoice if they remit payment within 10 days, a 10 percent discount if the invoice is paid within 20 days, and no discount with the full amount due in 30 days.
After you set up payment terms for multi-tiered discounts, you can assign the payment terms to the applicable vouchers or invoices. Then, you run the multi-tiered batch update program to recalculate the discount available and the due date for your vouchers or invoices. The system changes the discount percent based on the number of days that have passed and the current tier.
For example, you could put the Update A/R Invoice Batch program in your sleeper routine so that is runs nightly. Then, you can set up a multi-tiered payment term for which the first tier is 30 percent for 10 days and the second tier is 20 percent for 20 days. You assign the payment term to an invoice.
When the invoice is 11 days old and the multi-tiered batch update program is run, the system replaces the discount amount at 30 percent with the discount amount at 20 percent. The discount due date becomes 20 days from the date of the invoice. In the Accounts Payable system, the net due date is changed to 20 days from the date of the voucher.
Caution:
Multi-tiered payment terms can be used only by companies that set the tax rule for calculating tax on gross (including discount) to "yes". Vouchers and invoices that are generated by companies with the tax rule for calculating tax on gross (including discount) set to "no" are not processed by the multi-tiered batch update programs because the programs cannot update the discount amount without changing the tax amounts. Unless the multi-tiered batch update programs process the documents, the vouchers and invoices do not move to the next tier and the due dates and discount percent remain the same unless manually changed.22.6.1 Before You Begin
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Verify that your company tax rules are set up correctly. See Tax Rules by Company (P0022) in the JD Edwards World Tax Reference Guide.
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Set up or choose the net due date rule that you will use for your multi-tiered payment term.
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Set up a payment term code for your multi-tiered payment term.
Working with payment terms for multi-tiered discounts consists of the following tasks:
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Setting up a multi-tiered due date rule
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Updating the discount available for multi-tiered terms
22.6.2 Setting Up a Multi-Tiered Due Date Rule
From Accounts Receivable (G03), enter 29
From Accounts Receivable Setup (G0341), choose Payment Terms Revisions
From Payment Terms Revisions (G00141), choose Due Date Rule Revisions
Set up multi-tiered due date rules for payment terms that allow multiple discount percentages.
To set up a multi-tiered due date rule
On Due Date Rule Revisions
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Complete the following fields:
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Date Rule
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Description
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To define how the system calculates the due date, complete any of the following fields:
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Based on Date
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Months to Add
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Days to Add
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Fix Days to Use
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To specify information about a work day calendar, complete the following fields:
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Calendar
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Work Day Rule
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Choose the Add Multi-Tiered Information option
Figure 22-6 Multi-Tiered Due Date Rule screen
Description of "Figure 22-6 Multi-Tiered Due Date Rule screen"
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Complete the following fields:
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Day Range From
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Day Range To
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Discount Percent
Field Explanation From Day Enter the from day value for the first tier. This must be equal to 1 as it is the first tier. To Day Enter the day value for the end day of the first tier. This must be greater than the from day value for this tier. There must be no overlaps and no gaps. Discount % - Payment Terms The percent of the total invoice that will be discounted if the invoice is paid within the discount period specified by the first tier. This is entered as a decimal, for example, a 2% discount is .02. -
22.6.3 Updating the Discount Available for Multi-Tiered Terms
From Accounts Receivable (G03), enter 29
From Accounts Receivable Setup (G0341), choose Payment Terms Revisions
From Payment Terms Revisions (G00141), choose an option under the Multi-Tiered Batch Updates heading
To update the discount available for invoices and vouchers that you assign multi-tiered discount payment terms, you run the multi-tiered batch update programs. The update programs recalculate the discount available for your vouchers or invoices.
When you run the batch update program, the program selects invoices and vouchers with multi-tiered payment terms. The system verifies that the available discount is correct by multiplying the gross amount by the discount percentage for the correct tier. The system determines the correct tier based on the "based on date" and the number of days that have past. If the amount is not correct, the system will update the due date and the discount amount.
22.6.3.1 What You Should Know About
| Option | Explanation |
|---|---|
| Changing discount amounts or due dates | If you want to permanently change the discount amount or the due date to something other than a multi-tiered payment term, you must change the payment term field in the voucher or the invoice. If you change only the discount amount or the due date, and you do not change the payment term for the invoice or voucher, the next time you run the multi-tiered batch update program, the system will recalculate these values to fit into the tier. |
| Calculating due and discount dates for A/R | In Accounts Receivable, the system uses a net due date (data item DDNJ) and a discount due date (data item DDJ). The system calculates the net due date based on the net due date rule and the discount due date based on the discount due date rule. If the discount due date rule is a multi-tiered payment term, the system uses the "to day" of the current tier to calculate the discount due date. When the batch update program is run, the system determines that the discount amount is incorrect for the date. The system recalculates the discount and changes the discount due date to the right "to day". The system does not check to verify that the net due date is after the discount due date. You should monitor this when selecting discount and net due date rules for your payment terms. |
| Calculating due and discount dates for A/P | In Accounts Payable, the system uses only one due date (data item DDJ). The system uses data item DDJ to store the discount due date, although on the screen, the field name is Net Due Date. The system does not store the value from the net due date rule in the Accounts Payable Ledger (F0411). Even after the last "to day" from the multi-tiered payment term has passed, the system does not update DDJ with the date from the net due date rule. |