Terms of Payment (Accounts Receivable) (SAP Library - FI Accounts Receivable and Accounts Payable)

Terms of Payment (Accounts Receivable)

Use

If you have maintained a key for the terms of payment in the customer master record, the system automatically defaults this key whenever you enter an item for this customer. The terms of payment key can determine the following:

The valid cash discount rate for an individual payment with a maximum of 3 payment terms (first cash discount period, second cash discount period, and due date for net payment) and also a baseline date for the payment

The terms of payment for installment payments.

Features

The following section applies to individual payments. For more information on the terms of payment for installment payments, see: Terms of Payment for Installment Payments (Accounts Receivable)

You can also enter the terms of payment directly in the Days/Percent fields. You can enter two cash discount periods valid before the due date of the line item. You can also enter up to three decimal places for the cash discount percentage (for example, 2.125 for two and one-eighth percent discount).

Example

For example, to enter terms of payment of "2/10 Net 30", enter 10 (for ten days) and 2 (for two percent) in the first two fields.

Enter the amount on which the cash discount is based in the Disc.Base field. This amount does not have to be equal to the amount of the line item. If you leave the Disc.Base field blank, the system calculates the cash discount basis based on:

Whether the cash discount is calculated on the net or gross amount (that is, with or without tax). This specification is made in the system configuration.

Whether any G/L account line items are posted without cash discount (those where the W/o cash discount field is selected)

The Disc. Amount field enables you to enter the cash discount directly, overriding the system's calculation of the cash discount.

After you enter the line item and display it, you see the message Cash discount basis is calculated. The system calculates the cash discount when you post the document. The following figure illustrates the relationship between posting date, terms of payment, cash discount, and due date.

This graphic is explained in the accompanying text

You can enter G/L line items without cash discount. For example, assume you receive an invoice for goods and shipping. Cash discount is valid for the goods, but not for the shipping. In this case, enter a separate G/L line item for the shipping and select the field W/o Cash Discount. Most often, the calculated cash discount basis is the total of all G/L account line items where the field W/o cash discount is not selected.