Percentage discount on the purchase price that you are guaranteed under the terms of payment if you pay the invoiced amount within a certain period.

To define exactly when an invoice is to be paid, you can agree terms of payments with your vendor. Terms of payment can be agreed on three levels, for example, payment within 5 days 3 % cash discount, within 10 days 2 % cash discount, within 20 days net.

You can also agree installment conditions, which divide up the invoice amount into smaller amounts with different payment term keys. In this case, several vendor lines are created in the Financial Accounting document.

You can define terms of payment keys in Customizing for frequently used terms of payment, so that you only have to enter the key in Purchasing or Invoice Verification. The terms of payment key also contains the baseline date as of which the terms of payment days apply.

The buyer generally defines the terms of payment in the purchase order. The terms of payment are entered in the purchase order header and therefore apply to all items.

These terms of payment are suggested in Invoice Verification, but can be overwritten. If an invoice refers to more than one purchase order, the terms of payment in the first purchase order are suggested.