Payment terms are primarily used to indicate the due date of an invoice received from a vendor. This allows you to distinguish that the electric bill is due on the 10th of each month, the gas bill is due on the 15th of each month, and a regular maintenance company’s payments are always due 30 days after the invoice date.
Payment terms are typically applied to a vendor, and any invoice with that vendor “inherits” the same payment terms. However, payment terms can always be added to an invoice with no vendor or changed if a specific invoice does not have the same payment terms usually used with that vendor.
Create Payment Terms
The entire list of payment terms can be managed at Financials Main > Accounts Payable > Payment Terms. New payment terms can be created here, or next to the Payment Terms field on the Edit Vendor or Edit Invoice pages.
To create payment terms:
- Go to Financials Main > Accounts Payable > Payment Terms
- Choose Standard if the payment is due after a certain number of days past the invoice date. Choose Date Driven if the payment is due on a specific day each month. See here for more details about the payment term settings.
- Fill out the details to show when a payment is due and if a percentage discount has been negotiated
Add Payment Terms to Vendor
To apply payment terms to a vendor:
- Go to Financials Main > Accounts Payable > Vendors
- Search for a vendor
- Select a set of payment terms
Add Payment Terms to Invoice
To edit the payment terms on an invoice:
- Go to Financials Main > Accounts Payable > Vendor Invoices
- Create or Edit an invoice
- Select a set of payment terms and confirm the due date for that invoice
Payment Term Settings
Standard payment terms are used when the payment is due after a certain number of days past the invoice date.
- If ABC Maintenance required payment by 30 days past the invoice date, the Net Due In X Days should be set to 30.
- If they give a 5% discount when the payment is made in 10 days, set the Discount % to 5 and Discount if Paid within X Days to 10.
Date Driven payment terms are used when the payment is due on a specific day each month.
- If the DEF Electric bill is always due on the 10th of the month, the Net Due Before Day of the Month should be 10.
- If the due date is normally the 10th, but any invoice dated after the 7th will not be due until the next month, set Due Next Month if Issued within X days of the Due Date to 4.
- If they give a 5% discount when the payment is made by the 1st of the month, set the Discount % to 5 and Discount if Paid within X Days to 1.
Discounts are used for record-keeping only and do not automatically deduct from the amount owed. Any discount should be entered by hand.