Payment term

Use this page to define payment terms for business entities your company does business with. You can define terms for customers and suppliers or all business entities based on date, a percentage or an amount. You can offer discounts or apply penalties.

When you create or update an invoice for a customer or supplier, you can apply a payment term. Only the payment terms defined for the respective business entity type are available for selection.

Create a payment term

You need to create a payment term before you can apply it to an invoice. The number of days counts calendar days, not business days.

See the Working with payment terms section for examples.

You can create a new payment term or select Duplicate to modify an existing payment term.

  1. Select Create.
  2. Select a business entity type or select All to apply to customers and suppliers.
  3. Give your payment term a short name followed by a description if needed.
  4. Under Due date, the Type option sets the payment due date to a number of days based on one of three target dates:
    • After invoice date
    • After invoice date and extended to end of month
    • After the end of the month of invoice date
  5. You can enter a number of days or leave it at zero, which means payment due on the invoice date.
  6. If you want to offer a discount, enter a number for Day. The discount qualifies for payments made before that date.
  7. Select the type of discount, amount or percentage, and enter a corresponding value.
  8. If you want to add a penalty for payments received after the due date, select a penalty type and a corresponding value.
For each payment term, you can define a discount, or a penalty, or both relative to the number of days after the invoice date but prior to the penalty date, if there is one.

Edit a payment term

You can edit a payment term even if it is linked to an invoice. Any invoices with this payment term are affected. There is no control on this.

Delete a payment term

You cannot delete a payment term applied to an invoice.

Consider creating a new payment term.

Working with payment terms

This section provide examples on setting different types of payment terms.

Can I include discounts and penalties in a single payment term definition?

Yes. See the next the answers to the next 2 questions on how to define discounts and penalties.

How do I reward customers who pay in advance?

You can offer a discount to customers who pay before the due date. You can offer the discount as a fixed amount or a percentage of the total invoice.

In this example, the standard due date is 60 days after the invoice date. Customers who pay within 15 days after the invoice date get a 15% discount on the invoice total excluding VAT.

Field name Value
Due date settings
Number of days 60
Type After invoice date
Discount settings
From After invoice date
Day 15
Type Percentage

Percent

 15

How do I add a penalty when customers pay late?

In this example, the standard due date is 30 days after the invoice date. Customers who pay after 30 days pay an extra 15%.

Field name Value
Due date settings
Number of days 30
Type After invoice date
Penalty settings
Type Percentage

Percent

 15

In this example, the standard due date is 30 days after the invoice date. Customers who pay after 30 days, pay an amount that defaults to the invoice currency.

Field name Value
Due date settings
Number of days 30
Type After invoice date
Penalty settings
Type Amount

Amount

 20

What is the due date if I select After invoice date and extended to the end of month?

This type of payment term calculates the due date based on the number of days after the invoice date and then extends the due date to the end of the month in which the number of days falls. In the examples below, the number of days after invoice date and extended to the end of month is 30 days. It shows how the due date is calculated for different invoice dates.

Invoice date Due date Details
July 1 July 31 30 days after the invoice date is July 30 and then extended to the end of July, which is July 31.
July 10 August 31 30 days after the invoice date is August 9 and then extended to the end of August, which is August 31.

What is the due date if I select After the end of the month of invoice date?

This type of payment term calculates the due date based on the number of days after the end of the month in which the invoice date falls. In the examples below, the number of days after the end of the invoicing month is 30 days. It shows how the due date is calculated for different invoice dates.

Remember, the number of days counts each calendar day.
Invoice date Due date Details
July 1 August 30 The invoice date is in July; 30 days from the end of July is August 30.
July 10 August 30 The invoice date is in July; 30 days from the end of July is August 30.