Installment Payment Terms

Instead of paying an invoice or a voucher all at one time, you can enter the transaction for installment payments by using installment payment terms. Like split payment terms, installment payment terms divide the transaction into multiple payments over a specified period of time. Unlike split payment terms, which divide the transaction evenly by a specified number, you determine the percentage of each installment and the percentage of the discount for each installment.

The system calculates the installment amount by multiplying the transaction's gross amount by the percentage that you define. The system calculates the discount due date and net due date of each installment based on the due date rules that you assign to it.

Because you can assign different due date rules to each installment, you can create unlimited variations of the amounts due, the discounts allowed, the dates by which payments must be received to receive a discount, and the dates on which the installment must be paid before it is considered delinquent.

These examples describe the different types of installment payment terms that you might set up:

Example	Description
Equal payments with a discount.	You might set up five equal payments: Payment 1 = 20 percent with a 10 percent discount Payment 2 = 20 percent with a 10 percent discount Payment 3 = 20 percent with a 10 percent discount Payment 4 = 20 percent with a 10 percent discount Payment 5 = 20 percent with a 10 percent discount The discount and net due dates of the payment depend on the due date rules that you assign to the payment term.
Unequal payments with a discount.	You might set up three unequal payments: Payment 1 = 50 percent with a 5 percent discount Payment 2 = 30 percent with a 5 percent discount Payment 3 = 20 percent with a 5 percent discount The discount and net due dates of the payment depend on the due date rules that you assign to the payment term.
Unequal payments with varying discounts.	You might set up four unequal payments: Payment 1 = 40 percent with a 10 percent discount Payment 2 = 30 percent with a 8 percent discount Payment 3 = 20 percent with a 6 percent discount Payment 4 = 10 percent with a 5 percent discount The discount and net due dates of the payment depend on the due date rules that you assign to the payment term.

Example

Description

Equal payments with a discount.

You might set up five equal payments:

Payment 1 = 20 percent with a 10 percent discount
Payment 2 = 20 percent with a 10 percent discount
Payment 3 = 20 percent with a 10 percent discount
Payment 4 = 20 percent with a 10 percent discount
Payment 5 = 20 percent with a 10 percent discount

The discount and net due dates of the payment depend on the due date rules that you assign to the payment term.

Unequal payments with a discount.

You might set up three unequal payments:

Payment 1 = 50 percent with a 5 percent discount
Payment 2 = 30 percent with a 5 percent discount
Payment 3 = 20 percent with a 5 percent discount

The discount and net due dates of the payment depend on the due date rules that you assign to the payment term.

Unequal payments with varying discounts.

You might set up four unequal payments:

Payment 1 = 40 percent with a 10 percent discount
Payment 2 = 30 percent with a 8 percent discount
Payment 3 = 20 percent with a 6 percent discount
Payment 4 = 10 percent with a 5 percent discount

The discount and net due dates of the payment depend on the due date rules that you assign to the payment term.

This example uses an installment payment term for an invoice that is to be split into three installments:

Parameter	Value
Amount	9,000
Invoice Date	July 15
Based-on Date	Invoice Date
First Installment	2,000 with a 10 percent discount
Second Installment	3,000 with a 5 percent discount
Third Installment	4,000 with a 1 percent discount

Because the total percentage must equal 100, you must round the percentage of the last installment up as shown in this table:

Percent of Installment	Calculation
First Installment	2000 / 9000 = 22.222 percent
Second Installment	3000 / 9000 = 33.333 percent
Third Installment	4000 / 9000 = 44.445 percent

When you enter the invoice for 9,000, the system calculates the installment amounts as shown in this table:

Amount of Installment	Calculation
First Installment	9000 Ã .22222 = 1,999.98
Second Installment	9000 Ã .33333 = 2,999.97
Third Installment	9000 Ã .44444 = 4,000.05

The system uses soft rounding when amounts do not divide evenly.

Installment payment terms use due date rules to determine the discount and net due dates to assign to the transaction. The system uses the based-on date specified on the due date rule to determine the due dates for the first installment only. The system uses due dates of the first installment as the based-on date for the second installment, and the due dates of the second installment as the based-on date for the third installment, and so on.

For example, suppose in the previous example that you have these due date rules assigned to each installment to calculate the corresponding discount and net due dates:

Due Date Rule	Based-on Date	Days to Add
DISCT	Invoice Date	10
NET	Invoice Date	30

Because you entered the invoice with an invoice date of July 15, the system calculates the due dates for each installment:

Installment	Discount Due Date	Calculation	Net Due Date	Calculation
First	July 25	The system adds 10 days to the invoice date.	August 14	The system adds 30 days to the invoice date.
Second	August 24	The system adds 10 days to the net due date of the first installment.	September 13	The system adds 30 days to the net due date of the first installment.
Third	September 23	The system adds 10 days to the net due date of the second installment.	October 13	The system adds 30 days to the net due date of the second installment.