Cash Discount Percentage Rates and Cash Discount Terms 

Use

You define cash discount terms by specifying deductible cash discount percentage rates and payment periods.

You enter the cash discount percentage rate in the column Percentage rate (see the figure above, 1.). You can enter up to two places before and three places after the decimal point. The percentage rate applies to the period defined on the same line.

For the cash discount period you can either enter a number of days (see the figure above, 2.) or a date in the Fixed day (see the figure above, 3.) field, as well as making an entry in the Additional months (see the figure above, 4.) field. The fixed day overwrites the baseline date. The number of additional months is added to the month the system calculates for the baseline date.

The cash discount terms with day specification for the payment period could be: "3% cash discount for payment within 10 days, 2% cash discount for payment within 30 days and net payment within 60 days". Date-dependent cash discount terms could be: "3% cash discount for payment up to the 15th of the following month, 2% cash discount for payment up to the 25th in two months time, and net payment up to the 15th in three months time". These terms are defined in the figure above.

Features

You can define three periods for your terms of payment. You cannot enter a cash discount percentage rate for the last payment period (see the figure above, 1.). This specification is always a net payment term.

The system checks your specifications and rejects incorrect definitions. Your terms of payment are also converted into text form and issued under the heading Explanation (see 5 in the illustration above). As a result, you can check whether you have defined your terms of payment as you required. The terms of payment explanation generated is used to assist document entry if you do not enter your own explanation.

Activities

Defining Cash Discount Terms With a Number of Days

For cash discount terms with a number of days, you must specify an absolute number of days in the column Number of days. The system adds the specified number of days to the baseline date, which then gives the date by which the invoice is due.

In the line item, the days are displayed in the Days/percent field.

Defining Date-Dependent Cash Discount Terms

For date-dependent terms of payment, you can specify fixed days in the column Fixed day and a number of months in the column Additional months. The system replaces the baseline date determined with the specified fixed day. The number of additional months is added to the baseline date determined.

When you post a document, the cash discount terms are not displayed dependent on the date but instead with absolute day specifications. The system converts your date-dependent specifications to display the terms of payment in the document by determining the difference between the baseline date and the defined payment date.

You have defined the following date-dependent terms of payment: "2% cash discount for payment up to the 15th of the following month". The system calculates the absolute day specification for the document from the difference between 8/15/1999 (period end date) and 7/18/1999 (baseline date). A cash discount of 2% applies, therefore, for payment within 28 days. In the line item, the system displays the following data:

Combined Terms of Payment

For the terms of payment, you can use both forms for the period specifications, for example, if you want to define your cash discount periods with a fixed date and the due date for net payment with a number of days.

Your terms of payment are: "2% cash discount for payment up to the 15th of the following month and net payment within 60 days". You define these terms with the following entries: