Payment Terms

Payment terms are used to automatically create invoice installments. You can define
payment terms to create multiple installments and multiple levels of discounts.

Payment terms consist of one or more lines, each of which creates one invoice
installment. When you define a payment term, you can specify either percentages or
fixed amounts. A payment term line can have up to three discounts. Each line and
corresponding installment have a due date and up to three discount dates. Each line
and corresponding installment also have due or discount amounts. You can assign a
payment term to one or more sets to share that payment term across business units.

This figure shows the components of a payment term.

Tip: If you change the payment terms on an invoice, the installments are automatically
recalculated and you must reenter any manual adjustments made previously.

Payment Terms Due Dates and Discount Dates

Payment terms due dates and discount dates are based on one of the following
methods:
  Fixed Date: A specific day, month, and year that an installment is due for
payment.
 Days: A number of days added to the invoice terms date.
 Calendar: A Payables calendar that's divided into periods. You can assign a due
date to the period that includes the invoice terms date. You can assign due dates
to avoid weekends, holidays, and so on. You can't assign calendar-based terms to
an invoice if a period isn't defined for the terms date.
 Day of Month: A type of payment term with the following attributes:
o Day of Month: A specific day of the month when an installment is due for
payment. For example, enter 15 to schedule payment on the fifteenth day
of the month. Enter 31 to schedule payment for the last day of the month,
including months with less than 31 days.
o Cutoff Day: The day of the month after which the installment due and
discount dates advance to a future month. If you don't specify a cutoff
day, the current accounting month is used to determine due and discount
dates.
o Months Ahead: The number that's used to determine the month the
installment is due. If you enter 0 and the terms date is the same as, or later
than, the cutoff day, the installment is due the following month.
For example, a payment term has a Cutoff Day of 11, the Day of Month is
15, and Months Ahead is 0. If you enter an invoice with a terms date of
January 12, the installment is due February 15. If you enter an invoice with
a terms date of January 10, the installment is due January 15. If the terms
date is January 12 and Months Ahead is set to 1, the installment is due
March 15.
Note: Only due dates, not discount dates, can be based on a calendar.

Default Payment Terms

If you enter an Identifying PO on an invoice, the purchase order provides the default
payment terms for the invoice. If you don't enter an Identifying PO, the supplier site
provides the default payment terms. If the supplier site doesn't have payment terms, the
payment terms from the Manage Invoice Options page are used. You can override the
default payment terms on any invoice.
This figure shows how payment terms flow to the invoice.