Receivables Payment Terms
Defining payment terms allows to specify the due date, installment and discount date for open items.
Define balance forward payment terms to bill customers periodically (daily, weekly, or monthly) at the account or site level using Balance Forward Billing. This in detail will be discussed in another post as this is a new feature in R12.
Create split payment terms for invoice installments that have different due dates can be setup.
NOTE: Once a payment term has transactions associated to it, it cannot be updated. A new payment term would need to be created.
Receivables uses the following hierarchy to determine the default payment term for your transactions, stopping when one is found:
- Bill-to site, set at the Site level profile of the customer record
- Customer, set at the Account level profile of the customer record
- Transaction Type
Notes about Defaulting Payment terms:
- The defaulting hierarchy described above is only used for manually entered transactions. When AutoInvoice is used then either a TERM_ID or TERM_NAME in RA_INTERFACE_LINES_ALL (depending on how you have set up your transaction batch source) needs to be provided. AutoInvoice will not default a payment term for, as doing so would significantly slow down the performance of the process.
- When using the Balance Forward Billing (BFB) feature, and the customer you are interfacing data for is BFB enabled, the payment term associated to the customer profile (either site level or account level, depending on the Bill Level setup) is defaulted in by AutoInvoice.If in the customer profile, you have Override Terms checkbox checked, you still cannot override the payment term if the following conditions are true:
- The customer you are interfacing data for is a BFB enabled customer
- The payment term you are providing in the interface tables is a BFB term that is different from the default payment term you have set up at the Account or Site profile
If on the other hand, the payment term you are providing in the interface table is not a BFB term, then AutoInvoice will allow you to override the default BFB term.
The behavior described above is in line with the concept of Balance Forward Billing, which provides a mechanism for outstanding transactions of a particular customer (or site) to all have a common due date based on a billing cycle. Hence, it is illogical to allow a customer or site’s transactions to be associated to many different BFB terms as that defeats the purpose of defining a billing cycle.
Receivables provides the following predefined payment terms:
- 30 NET: The balance of the transaction is due within 30 days.
- IMMEDIATE: The balance of the transaction is due immediately.
If you need to define payment terms specific for your business requirements, you can create additional payment terms.
Responsibility: Receivables Manager
Navigation: Setup > Transactions > Payment Terms
The setup shown below is for a payment term that has a due date 40 days from the transaction date. If the invoice amount is payed in 10 Days then 2 Percent discount will be given to the Invoice.