Friday, 9 September 2011

Payment terms Setup In AP

Setup>Invoice>Payment Terms
Payment Terms helps in determining the payment schedule i.e. when an invoice is due for payment or when an invoice is due for discount. A payment term can have multiple lines based on either % due or amounts due. E.g. 60% Due within 10 Days, 40% due within 20 days. The payment terms defined here are assigned to supplier/supplier site, in turn they default to all the invoices entered against the supplier/site and determine the payment schedule of each invoice. Payment terms help in generating the ‘Cash Requirement Report’.
Fig 1.1.1 Payment Terms
Types of Payment Terms
Fixed Date: Which are due on a particular day.
Days Basis with Discount: Due after certain days from the date of invoice and if paid before due date, discount is available.
Days Basis without Discount: Due after certain days from the date of invoice.
Cut Off Day Basis: All the invoices on or before a certain date fall due on a certain date in next Month or so.
Calendar: A special calendar that specifies a due date for the period that includes the invoice terms date. Only due dates can be based on a special calendar. Discount dates cannot be based on a special calendar.
Define Payment Terms
Name: Enter the name of the Payment Term. Do not give a very long name, as the same cannot be viewed completely in the supplier entry screen while assigning the payment term to a supplier.
Effective Dates: Give the start date and end date of the Payment Term. Before Start Date or after the end date, the Payment Term is not available in the list of values to assign to Supplier/site, PO or Invoice.
Give the amount due either in %’s (60%, 40%) or in absolute amounts.
Fixed Date: Give the date in the fixed date in case the payment falls due on a particular date.
Days: Give the number of days to determine the due date.
Discount: Enter the % of discount in the ‘Discount window’ and number of days before which the payment has to be made, to avail the discount. Enter discounts up to 3 levels based on the need.
Fig 1.1.2 Payment Terms – First Discount
In case of Cut off Day type of payment term
Cut Off Day: Give the cut off date for selecting all the invoices entered on or before the such date.
Day of the Month: Give the day on which the payment is due.
Months Ahead: Enter the number of months ahead to calculate the above day of the month.
E.g. Cut Off day is 31, Day of the Month is 10, Months Ahead is 1.
The above parameters of the payment term determine that all invoices entered on or before 31st of a month will be due on the 10th of next month.

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