AR Invoice Terms

You use this program to define the default settlement discount you want to extend to a customer whose payments are made within a prescribed period of time and to define when an invoice becomes due for payment.

The AR invoice term code is used to calculate the terms discount and invoice due date when:

  • a transaction is posted using the AR Invoice Posting program
  • sales orders are invoiced using the Sales Order Entry program
  • permanent entries are posted using the AR Post Permanent Entries program
  • quotations are printed using the Quotation Batch Printing program

Although each customer is assigned an AR Invoice term code using the Customers program, this can usually be overridden with a different terms code at the time of processing transactions.

Menu and Toolbar

Field Description
File  
Save and Close

This saves the details you entered or changed and returns to the previous screen.
Close

This returns you to the previous screen.
New This adds a new data record.
Delete

This deletes the data record currently displayed.
Save This saves the details you entered or changed.
Invoice terms

Indicate the invoice terms you want to maintain.

AR Invoice Terms Details

Field Description
Terms This indicates the invoice terms code you entered on the toolbar.

This terms code can be assigned to a customer using the Customers program, to establish the terms applicable to that customer.

The terms discount is calculated according to the AR invoice terms code defined against the transaction, together with the options selected at the Calculation of terms discount setup option (Accounts Receivable Setup). If none of the options against the Calculation of terms discount are selected, then the terms discount is calculated only on the merchandise portion of the transaction.

For example:

A taxable Billing is entered using the Sales Order Entry program, with the following lines:

  • a merchandise line with a value of 100.00
  • a freight line with a value of 15.00
  • a miscellaneous charge line with a value of 30.00

The discount percentage defined against the invoice term applicable to this Billing is 2.50%.

The tax portion amounts to 14.50 against the invoice.

The following indicates how the terms discount for this transaction is calculated depending on your selections at the Calculation of terms discount setup option (Accounts Receivable Setup).

  • If Include tax is selected, then the discount is calculated as:

    (Merchandise amount + Tax) x Discount percentage = (100.00 + 14.50) * 2.50/100 = 2.86

  • If Include freight is selected, then the discount is calculated as:

    (Merchandise amount + Freight value) x Discount percentage = (100.00 + 15.00) * 2.50/100 = 2.88

  • If Include other charges is selected, then the discount is calculated as:

    (Merchandise amount + Miscellaneous charge) x Discount percentage = (100.00 + 30.00) * 2.50/100 = 3.25

  • If Include tax, Include freight and Include other charges are selected, then the discount is calculated as:

    (Merchandise amount + Freight value + Miscellaneous charge + Tax value) x Discount percentage = (100.00 + 15.00 + 30.00 + 14.50) * 2.50/100 = 3.99

  • If none of the options at the option: Calculation of terms discount are selected, then the discount is calculated as:

    Merchandise amount x Discount percentage = 100.00 * 2.50/100 = 2.50

Discount is only calculated for credit and debit notes if the Credit and/or debit notes setup option is enabled (Accounts Receivable Setup)
Invoice terms information  
Description Enter a description for the invoice terms code.

To make this description more meaningful, you could include both the number of days and the percentage. For example: 30 Days - net or 30 Days -2.5%.
Discount percent

This indicates the discount percentage which must be used to calculate the actual discount amount. The discount amount is the amount given to customers if their payment is received within the discount options specified below.

This discount is only applied when receiving payment from the customer.
Discount  
Discount option Specify the conditions under which the discount amount is given to customers.
OptionDescription
Number of daysSelect this to apply the settlement discount only if payment is made within a specified number of days from the date of the invoice.

This is enabled by default when the Invoice ageing method is By invoice date (Accounts Receivable Setup).

Fixed daySelect this to enter a specific day of the month and the number of months within which payment must be made by a customer in order to qualify for the settlement discount applicable to this terms code.
Fixed dateSelect this to specify a fixed date by which an invoice must be paid to qualify for the settlement discount.
Number of days fixedSelect this to specify your own ageing buckets according to which an invoice must be paid to qualify for the settlement discount. Select Define at the Defined fixed day calendar field to enter the bucket end dates.

When you select this option, you need to use the AR Terms Ageing Headings program to define the headings to display in queries and reports for your custom ageing buckets as the standard ageing headings only apply to 30 day ageing buckets.

This is only available when your Invoice ageing method is By statement (Accounts Receivable Setup).
Discount days Indicate the number of days (from the invoice date) within which payment must be made by a customer in order to qualify for the settlement discount applicable to this terms code.

If you are using the Number of days fixed option, then the Discount days should match the length of the periods of your user defined discount ageing buckets.
Day of month Indicate the specific fixed day of the month within which payment must be made by a customer in order to qualify for the settlement discount applicable to this terms code.

This field is disabled when the Invoice ageing method is By invoice date (Accounts Receivable Setup).
Number of months

Indicate the cut-off number of months for which the discount is applicable.

This field is disabled when the Invoice ageing method is set to By invoice date (Accounts Receivable Setup).

The Day of month is the fixed day of the month and the Number of months indicates how many months to add. The program overwrites the invoice date with the Day of month. The Number of months is then added to the invoice date to give the due date. If the due date is less than the invoice date, then an extra month is added to the month.

For example:

Invoice date is 28/10/yy

Day of month = 10

Number of months = 0

Replacing the invoice date with the Day of month makes the invoice date 10/10/yy

Adding the Number of months to the invoice month (10 + 0 = 10) giving 10/10/yy

The calculated due date is less than the invoice date so 1 is added to the month. The new calculated due date is now 10 + 1 = 11 making the due date 10/11/yy.

The Day of month with Number of months option is therefore only totally accurate when the Day of month is the last day of the month.
Discount date Indicate the cut-off date by which payment must be made by a customer in order to qualify for the settlement discount applicable to this terms code.
Defined fixed day calendar - Define

Select this to use the AR Terms Due Dates program to specify the end dates of the ageing buckets if you selected the Discount option - Number of days fixed.

The headings for these ageing buckets must be defined using the AR Terms Ageing Headings program, because the standard headings (Current, 30 days, 60 days, 90 days and Over 120 days) only apply for 30 day ageing buckets.
Ageing heading code This only applies to the Number of days fixed options for Discount and Due. When you define your own ageing buckets, the standard headings of Current, 30 days, 60 days, 90 days and Over 120 days can no longer be assumed, so you need to define your own ageing bucket headings against a heading code in the AR Terms Ageing Headings program. You indicate the heading code to use in this field.
Due  
Invoice due option

The invoice options enable you to define the time periods within which an invoice is due for payment.

Once the periods defined here are exceeded, the invoice is classified as overdue for payment.

The Invoice options are used:

  • when credit checking is performed on the basis of invoice terms. Credit checking is defined at company level (Sales Orders Setup) or against the customer using the Customers program.

  • by the AR Finance Charge Calculation program when the Invoice ageing method is set to: By invoice due date (Accounts Receivable Setup).

Option Description
Number of days Select this to classify an invoice as overdue after a specified number of days from the invoice date. You specify this number of days in the Invoice days field.
Fixed day

Select this to enter a specific day of the month within which payment must be made by a customer before an invoice is classified as overdue.

You can only select this option if your Invoice ageing method is defined as being By invoice due date (Accounts Receivable Setup).
Fixed date Select this to enter a specific cut-off date by which payment must be made by a customer before an invoice is classified as overdue.

You specify this date in the Invoice due date field.

You can only select this option if your Invoice ageing method is defined as By invoice due date (Accounts Receivable Setup).
Number of days fixed Select this to be able to specify your own cut off dates by which payment must be made by a customer before an invoice is classified as overdue. Select Define at the Invoice defined fixed day calendar field to enter theses cut off dates.

This enables you to age invoices based on your own ageing buckets. It works in the same manner as the By statement ageing method except that the buckets are user defined and not 30 day buckets calculated from the AR period end dates.

If you select this option then you need to use the AR Terms Ageing Headings program to define the headings to display in queries and reports for your custom ageing buckets, as the standard ageing headings only apply to 30 day ageing buckets.

This option is only available when your Invoice ageing method is By statement (Accounts Receivable Setup).

Invoice days Indicate the number of days (from the invoice date) within which payments must be made by a customer before an invoice is classified as overdue.

If you are using the Number of days fixed option, then the Invoice days should match the length of the periods of your user defined invoice ageing buckets.
Invoice day of month Indicate the specific day of the month after which the invoice becomes overdue.
Invoice number of months

Indicate the cut-off number of months before an invoice is classified as overdue.

In the example below, the day of the month is 25 and the number of months is 1.

A/R Invoice Terms - Invoice due dates defined using Fixed Day option

Invoices dated Date on which invoice becomes overdue
26th January to 25th February (inclusive) 26th March
26th February to 25th March 26th April
Invoice due date Indicate the date after which the invoice is classified as overdue.
Invoice defined fixed day calendar - Define

Select this to use the AR Terms Due Dates program to specify the end dates of your ageing buckets for invoice ageing if you selected the Invoice due option - Number of days fixed.

The headings for these ageing buckets must be defined using the AR Terms Ageing Headings program, because the standard headings (Current, 30 days, 60 days, 90 days and Over 120 days) only apply for 30 day ageing buckets.

Notes and warnings

Deletion considerations

  • You are able to delete a terms code even if it is assigned to existing customers and invoices.

    Before you delete the terms code you will receive a warning message informing you of the number of customers and invoices linked to the terms code, as well as the invoice balance.

eSignature considerations

Electronic Signatures provide security access, transaction logging and event triggering. This enables you to increase control over your system changes.

Access to the following eSignature transactions within this program can be restricted at Operator, Group, Role or Company level. You configure this using the eSignature Setup program.

eSignature Transaction Description
AR Invoice terms added

Controls access to the New Invoice Term function in the AR Invoice Terms program.
AR Invoice terms changed

Controls access to the maintenance of invoice terms in the AR Invoice Terms program.
AR Invoice terms deleted

Controls access to the Delete function in the AR Invoice Terms program.