Terms of payment are rules agreed with your business partners. They apply to financial clearing for goods and services.

Cash discounts are reductions to payments made within a specified time period.

In the Accounts Receivable (FI-AR), Accounts Payable (FI-AP), and General Ledger (FI-GL) application components, you can define terms of payment at three levels. The most important data for terms of payment is as follows:

• Due date for net payment of the invoice

• Cash discount periods

• Cash discount percentage rates

You must enter this data in the line items when you enter a document for a customer or vendor account. The data is saved in the line items. The system needs this data to determine the due date of an invoice and the cash discount amount.

To prevent you having to enter these terms of payment more than once, you can store them under a terms of payment key. If you specified this key when entering the line item, or you defined it in the customer or vendor master record, the system then defaults the terms of payment when you enter a document. You can overwrite these terms during document entry, or change them later once the document has been created.

This section explains:

• In which document fields you can enter predefined terms of payment

• The rules under which terms of payment are defined

• The rules for defining the terms of installment payments

• The cash discount fields in which predefined terms of payment cannot be entered. You can either enter this information manually (during document entry), or have the system determine it. You can make certain specifications.

• Posting and clearing of the cash discount by the system

• Under what circumstances terms of payment and cash discount can be changed in a document, and the conditions you can lay down concerning these changes.