Guidelines for Defining Payment Terms

Use payment terms to identify due dates and discount dates on your customer transactions.

After you create payment terms, you can optionally assign them both to customer account and site profiles and to transaction types. The payment terms you assign are then assigned by default to transactions you create manually using the related customer account or site, or transaction type.

Considerations for payment terms include:

• Payment Terms and Customer Profiles

• Payment Terms and Discounts

• Payment Terms and Print Lead Days

• Split Payment Terms with Installments

• Prepayment Payment Terms

Payment Terms and Customer Profiles

The setup of payment terms on customer account and site profiles influences the use and availability of payment terms on transactions you create manually.

When you create a transaction manually, Receivables looks for payment terms to assign to the transaction in this order:

1. Payment terms assigned to the site profile of the bill-to customer.

2. Payment terms assigned to the account profile of the bill-to customer.

3. Payment terms assigned to the transaction type.

You must enable the Override terms option on the customer account or site profile in order to change the payment terms assigned to the transaction. Enabling the Override terms option provides more flexibility in assigning payment terms to manual transactions.

If you don't enable the Override terms option on customer account and site profiles, then:

• You can't change the payment terms assigned by default.

• If you select a bill-to customer, and no payment terms were assigned either to the account or site profiles of this customer or to the transaction type, then no payment terms are available for use on the transaction.

  You can alternatively either select another bill-to customer or select payment terms before selecting a customer.

• If you select payment terms and then select a bill-to customer, and no payment terms were assigned to the account or site profiles of this customer, then you can't change the payment terms originally assigned.

Tip: If you intend to leave the Override terms option disabled on customer account and site profiles, then make sure that you assign payment terms to the transaction types that you intend to use for manual transactions.

Payment Terms and Discounts

Define standard payment terms for your customers to specify the due date and discount date for their open items. Payment terms can include a discount percent for early payment, and you can assign multiple discounts to each line of your payment terms.

For example, the payment terms named 2% 10, Net 30 indicates that a customer is allowed a two percent discount if payment is received within 10 days. After 10 days, the entire balance is due within 30 days of the transaction date with no applicable discount.

Enable the Allow discount on partial payments option to let your customers take discounts for partial payments on items associated with payment terms. A partial payment is a payment less than the remaining amount due. If you do this, you must also ensure that the Discount on partial payment Receivables system option is enabled.

Use the Discount Basis field to determine what amount to use to calculate discounts for the payment terms. If the payment terms use installments, you can assign discount percentages to each installment.

Use the Discount Basis Date field to select the date to use to calculate discounts. The choices are:

• Receipt Date: Date the receipt is created.

• Receipt Application Date: Date the receipt is applied to the transaction.

• Deposit Date: Date the receipt is deposited into the remittance bank.

The discount is applied if the transaction is paid within the payment terms discount date. The formula is: Transaction Date + Discount Due By Period >= Discount Basis Date (Receipt Date/Receipt Application Date/Deposit Date).

Payment Terms and Print Lead Days

The Print Receivables Transactions process prints eligible transactions according to the transaction date. You normally can't print a transaction in advance of the transaction date.

You can use the Print Lead Days field to allow printing of transactions with the applicable payment terms a designated number of days before the transaction date.

Use this field in conjunction with the due date and discount date to print and send customers transactions in advance of the transaction date, for example, to remind customers of due dates and potential discounts.

Split Payment Terms with Installments

Create split payment terms for invoice installments that have different due dates. The payment terms determine the amount of each installment.

Use the Installment Option field to determine how to allocate the freight and tax charged to transactions. You can either distribute tax and freight charges across all installments, or allocate all freight and tax charges to the first installment.

Define the payment schedule for the split payment terms. The payment schedule determines when each installment is due, how much in each installment is due, and how much discount to offer in each installment.

Prepayment Payment Terms

You can optionally define prepayment payment terms by enabling the Prepayment option. You assign prepayment payment terms to transactions to indicate which transactions require prepayment for goods and services.

Prepayment payment terms don't require the capture of funds in advance of invoicing or the delivery of prepaid goods or services. You must establish specific business practices at your enterprise if you want to capture these funds in advance.