Calculation of Days in Arrears 
The system determines the days in arrears depending on:
The payment due date
Whether the customer has subtracted the cash discount from the payment, and if so, how much
The system calculates the days in arrears as follows:
If the customer does not take a discount: Baseline Date for Due Calculation + Net Payment Terms Period
If the customer takes a discount (regardless of how much): Baseline Date for Due Calculation + Cash Discount Days 1
Examples
In the following examples, the following payment terms apply:
Payment Terms – Due in Days | Payment Terms – Cash Discount |
|---|---|
10 days | 3% (Cash Discount Days 1) |
20 days | 2% (Cash Discount Days 2) |
30 days | none (Net Payment Terms Period) |
In all examples the posting date and the baseline date for due calculation are the same date: May 1. Depending on which amount the customer pays (that is, whether or not discount was taken), the following dates are used to calculate the days in arrears:
Payment Amount | Date Used to Calculate Days in Arrears | Calculation |
|---|---|---|
970 | May 11 | May 1 + 10 days (Cash Discount Days 1) |
980 | May 11 | May 1 + 10 days (Cash Discount Days 1) |
1000 | May 31 | May 1 + 30 days (Net Payment Terms Period) |
Example
Example 1: The customer pays 1000 on June 1 without taking a discount.
Customer Pays 1000 on June 1
Since the customer didn‘t take a discount, the date used to calculate the days in arrears is May 31.
Days in Arrears = June 1 - May 31 = 1
Payment is 1 day beyond terms.
Example
Example 2: The customer pays 1000 on May 30 without taking a discount.
Customer Pays 1000 on May 30
Since the customer didn‘t take a discount, the date used to calculate the days in arrears is May 31.
Days in Arrears = May 30 - May 31 = -1
Payment is 1 day within terms.
Example
Example 3: The customer pays 970 on May 8 and takes a discount of 3%.
Customer Pays 970 on May 8
Since the customer took a discount, the date used to calculate the days in arrears is May 11.
Days in Arrears = May 8 - May 11 = -3
Payment is 3 days within terms.
Example
Example 4: The customer pays 980 on May 15 and takes a discount of 2%.
Customer Pays 980 on May 15
Since the customer took a discount, the date used to calculate the days in arrears is May 11.
Days in Arrears = May 15 - May 11 = 4
Payment is 4 days beyond terms.
Example
Example 5: The customer pays 970 on May 15 and takes a discount of 3%.
Customer Pays 970 on May 15
Since the customer took a discount, the date used to calculate the days in arrears is May 11.
Days in Arrears = May 15 - May 11 = 4
Payment is 4 days beyond terms. (In this case the customer was entitled to only 2%, not 3% discount.)
Note
In the last two examples it makes no difference whether the customer took 2% or 3% discount; in both cases the date used to calculate the days in arrears is May 11