Define Payment Terms

This document explains how you define the due date calculation for supplier invoices or customer invoices.

Outcome

Payment terms are defined regulating how the due date is calculated and whether the payment should be split into several payments with separate due dates.

The set of payment terms are connected to customers on 'Customer. Open' (CRS610/K) and to suppliers on Supplier. Define Purchase & Financial (CRS624/F). The terms are then automatically applied when invoices are created in accounts receivable and the order system and when invoices are entered in accounts payable.

The payment terms are saved in the parameter file (CSYTAB) and can be reviewed in 'Payment Terms. Open' (CRS075).

Before you start

  1. A language must be connected to the customer on 'Customer. Open' (CRS610/E).
  2. If the 'Split due date' option is selected in this activity, at least one of each components must be defined:
    • Payment method for accounts receivable in 'AR Payment Method. Open' (CRS076)
    • Payment method for accounts payable in 'AP Payment Method. Open' (CRS071)
    • Cash discount terms in 'Cash Discount Term. Open' (CRS077)

Follow these steps

  1. Start 'Payment Term. Open' (CRS075/B).
  2. Enter a three-position ID for the terms and the valid language. Click Create.
  3. On the E panel, specify a name (optional) and a terms text (required).
  4. Specify the values listed in the Parameters to set table for the E panel (optional). Press Enter.

Define payment values for partial payments

  1. If you selected the 'Split due date' check box in step 4, continue with defining the partial payments.
  2. On 'Payment Terms. Open Detail' (CRS074/B), enter a three-position record ID. Click Create.
  3. On the E panel, specify the requested values. Press Enter.

Parameters to set

Program ID/Panel Field The field indicates …
(CRS075/B) Language … the valid language for the payment terms. Since payment terms are language-specific, the language must be entered. However, the same set of payment terms can exist in several languages.
(CRS075/E) Terms text … an explanatory text that is printed on external documents.

Define general values for due date calculation

(CRS075/E) Start day

… the day when the due date calculation should start.

The start day can be 01–31 or 99, where 99 indicates the last day of the month. If a month free of payment should apply, the start day must be entered as 99.

Example

1) The invoicing date is January 20, and the start day is 25. The due date calculation starts from January 25.

2) The invoicing date is January 5, and the start day is 99. The due date calculation starts from January 31.

(CRS075/E) Month free of payment

… how many whole months should be added when calculating the due date from the start day. Valid values are 00–99.

This field regulates the second step in the calculation, which starts from the result of the entry in the 'Start day' field. If the number of months free of payment is set to 2, the calculation of the due date in example 1 above would start from March 25 instead of January 25.

(CRS075/E) Number of days

… how many days should be added when calculating the due date. Valid values are 000–999.

This field regulates the third step in the calculation, which starts from the result of the entry in the 'Month free of payment' field. If the number of days is set to 10, the calculation of the due date in example 1 above would start from April 4 instead of March 25.

(CRS075/E) Payment day

… a specific day in the month for the due date. Valid values are 01–31 or 99, where 99 indicates the last day of the month.

This field regulates the fourth step in the calculation, which starts from the result of the entry in the 'Number of days' field. If payment day is set to 27, the due date in example 1 above would be on March 27 instead of March 25.

Automatic adjustment of due date

Some customers have fixed days for executing payments each month. You can automatically adjust the due date to match the customer's routines by entering up to four fixed due dates on (CRS610/J). Example: Three fixed due dates are entered for a customer: 10, 20 and 99 (= last day of month). If the due date calculated is December 31, 2002, the actual due date is January 10, 2003.

(CRS075/E) Split due date

… whether the payment is split into several payments with separate due dates.

If this check box is selected, 'Payment Term. Open Details' (CRS074/B) for defining payment details is displayed when Enter is pressed on (CRS075/E).

As a result of selecting the 'Split due date' check box, all supplier invoices and customer invoice created during customer order processing are split into several invoices in accounts receivable and the general ledger, each one with a different due date, amount, and invoice number.

On 'Payment Terms. Open Details' (CRS074/E), decide how to retrieve the invoice number for the split invoices in the 'Additional character or number series' field on (CRS074/E). For details, see below.

(CRS075/E) Cash payment

… whether payment is made in cash on delivery or via invoicing. The parameter selected determines how payment is made when customer orders are processed.

Alternatives

0 = Payment via invoicing

1 = Cash payment.

If the invoicing option is selected, the usual customer account is debited for the payment (accounting rule OI20–100) in accounts receivable. However, if the cash payment alternative is selected, there is no open customer debt to record in accounts receivable. Instead, transactions are created under accounting rule OI20–101 (Cash payment) in the general ledger.

For the cash payment alternative to work automatically, the payment terms are specified for order category Cash order on 'CO Type. Control Fields' (OIS014/F). The program is called from 'CO Type. Open', OIS010/B). This overrides the customer's normal payment terms upon customer order entry.

(CRS075/E) Petty cash

... whether cash sales management should be activated after invoicing.

This can only be done if the 'Cash payment' check box is not selected.

(CRS075/E) Outstanding without risk

... if the invoiced amount should be included in the outstanding amount without risk. The outstanding amount without risk is deducted from the outstanding amount when the credit limits are controlled.

Alternatives are:

1 = No

2= Yes

3 = Yes, update credit monitoring

If alternative 3 is selected, the invoices without risk can be monitored in the credit monitoring system (RMS420 - Credit Monitoring. Process). A prerequisite is that this is enabled in (RMS905 - Settings - Credit Monitoring).

The risk per payer can be followed up in 'Customer Credit Limit. Open' (CRS315).

An outstanding invoice amount without risk is a customer invoice or debt that is considered to be without risk in the accounts receivable according to the normal credit policy. The outstanding amount without risk is deducted from the outstanding amount when the credit limits are compared against the fixed credit limits.

Invoices with risk-free payment terms do not consume the available fixed credit limit that has been set for general trading terms. The benefit of this flexible approach to credit checking means that fixed limits do not need to be adjusted except as determined by the regular credit limit or customer risk reviews. For overdue invoices, all invoices are with risk even if they have been treated as risk-free before the due date has passed.

(CRS075/E) Start day interval ...if a start day interval is used to calculate the due date. This type of interval can be based on month/day or day only.

If the invoice date is within a certain month/day interval or day interval, the last day in that interval is used as 'Start day' when calculating a due date.

This field is optional.

The start day interval rules are defined in 'Start day interval. Open' (CMS071) and 'Interval days. Open' (CMS072).

Note: When a start day interval is specified, start day cannot be used. The start day will then be the end of each interval in (CMS072).

When a start day interval is specified, payment day cannot be used. If a payment day is used together with an interval, the payment day for payment term and cash discount has to be specified on each interval in (CMS072).

Define payment values for partial payments

(CRS074/E) Payment method – accounts payable

… the payment method to use for payments in accounts payable. This value, together with the following, makes it possible to process each payment in different ways, for example as a check, draft, or bank transfer.

If a payment method is not entered, the value = = = is automatically inserted. This indicates that the same payment method as that on the original invoice is used.

(CRS074/E) Payment method – accounts receivable

… the payment method to use for payments in accounts receivable.

If a payment method is not entered, the value = = = is automatically inserted (see above).

(CRS074/E) Cash discount terms

… a language-specific set of terms for cash discount calculation. By defining the cash discount per partial payment, it is possible to grant a cash discount only for the first payment, for example.

The value = = = can be entered manually, if the same cash discount terms as those on the original invoice should be used.

(CRS074/E) Percentage of payment

… the percentage share of the total amount to pay for this payment (required information).

Note that the total percentage for all recorded partial payments must be 100.

(CRS074/E) Additional character or number series

… which invoice number to use for the original invoice when a customer order is created for a customer whose payment terms require that payments be split into several invoices with separate due dates.

Alternatives

0 = The invoice number is retrieved from number series 4 in 'Internal Invoice Series. Open' (MFS165).

1 = An additional character (A-Z) is added.

(CRS074/E)

Start day

Month free of payment

Number of days

Payment day

Start day interval

(See above.)
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