Multitiered Discount Payment Terms

Many companies want to reward their customers for early and prompt payments by allowing a greater discount based on the date that the customers remit their payment. Being able to change the discount percentage based on the date enables you to negotiate better terms with your suppliers and offer better terms to your customers.

You can set up advanced payment terms that allow the discount percentage to vary according to the number of days that have passed from the date that you specify as your based-on date for your due date rule. You can define up to five tiers of discount percentages.

For example, you might set up a payment term that allows a 10 percent discount if the payment is remitted within 10 days from the invoice date, a 5 percent discount if the payment is remitted within 20 days, and a 1 percent discount if the payment is remitted between 21 and 29 days.

To determine the discount due date for the first tier, the system uses the information that you provide on the due date rule. To determine the discount due date for subsequent tiers, the system adds the ending day of the tier to the based-on date specified.

To calculate new discount percentages and discount due dates for subsequent tiers, you must run either the Update A/R Invoices program (R005142) or the Update A/P Vouchers program (R005141).