Defining terms in Vendor Setup

Terms only apply to invoices, miscellaneous credits, and debit memos. Terms must be defined in SA Table Code Value Setup before they can be added to the vendor master record. Defining terms on the vendor master record ensures the terms are consistently applied to the purchase order during entry and costing activities.

You can also adjust the terms for each transaction. Vendors often offer terms to induce a steady cash flow by providing an incentive for their customers to pay within a certain discount period. For example, 2/10 n/30 offers a 2% discount if the invoice is paid within ten days from the invoice date. If the discount period lapses, the entire invoice is due within 30 days or service charges can be applied.

Terms discounts are calculated on the net or gross invoice amount, based on the Vendor Setup record. The net invoice amount is calculated for trade invoices only. This formula is used:

• Invoice Amount - Expense Addons - Capitalized Addons