A Payment Term helps to set a schedule according to which payments will be made.

A Payment Term defines a specific payment slab. For example, 50% payment on shipping and 50% on delivery of the item. You can save your business’s payment terms on BizCentric and include them in all documents in the sales/purchase cycle. BizCentric will make all the General Ledger entries accordingly.

In BizCentric, the Payment Terms form only defines portion percentages. The actual payment schedule can easily be applied using the Payment Terms Template.

You can use Payment Terms in the following documents:

• Sales Invoice
• Purchase Invoice
• Sales Order
• Purchase Order
• Quotation

To access Payment Term, go to:

> Home > Accounting > Accounting Masters > Payment Term

1. How to create a Payment Term

1. Go to the Payment Term list and click on New.
2. Enter a name for the Payment Term (eg: 50% post-shipment).
3. Enter the Invoice portion. If you enter 50, the portion will be 50 percent of the Invoice amount.
4. Select a Due Date type.
5. Under Credit Days enter the number of days after which the remaining amount has to be paid.
6. Save.

The fields are explained as follows:

• Payment Term Name: The designated name for this Payment Term.
• Due Date Based On: The criterion used to calculate the due date for the Payment Term, typically measured as X number of days from the posting date of the invoice/order. There are three available options:

1. Day(s) after invoice date: The due date is determined by a specified number of days from the posting date of the invoice. For instance, if 7 days are entered on the 20th, the due date will be the 27th.
2. Day(s) after the end of the invoice month: The due date is calculated based on a specified number of days from the last day of the month in which the invoice was generated. For example, if 7 days are entered in the current month and the last day of the month is the 30th, the due date will be the 7th of the next month.
3. Month(s) after the end of the invoice month: The due date is determined by a specified number of months from the last day of the month in which the invoice was created. For instance, if 3 months are entered on the 20th of January, the due date will be the 20th of March.

• Invoice Portion: The percentage of the total invoice amount to which this Payment Term applies. The specified value represents a percentage, for example, 50 indicates 50% of the invoice/order’s Grand Total.
• Credit Days (optional): The number of days or months of credit allowed, depending on the option chosen in the Due Date Based On field. A value of 0 indicates no credit is allowed.
• Description (optional): A concise description of the Payment Term.

1.1 Setting up Discount on Early Payments

You can establish discounted payment terms where a portion of the invoice value is discounted if payment is made within a specified period. The discount configuration is defined by the following fields:

• Discount Type: By default, it is Percentage, but you can also select Amount.
• Discount: Specified as either a Percentage or an Amount (e.g., 10% or ₹ 5,000).
• Discount Validity Based On: Functions similarly to the Due Date Based On field in the previous section.
• Discount Validity: Indicates the duration, in days or months, for which the discount is valid from the invoice date (e.g., 10 days after the invoice date).

After linking the Payment Terms with an Invoice, the discount will be automatically applied when a payment is created against that invoice.

> Note: This discount is only applied on a Payment Entry that is made from an individual invoice. Independently made Payment Entries, where invoice references are fetched, will not have any early payment discount applied.

1.2 Payment Terms in Converted Documents

When converting or duplicating documents within the sales/purchase cycle, the associated Payment Term(s) will also be duplicated. However, when generating a Sales Order from a Quotation, the Due Date specified in the Payment Terms will reflect that of the Quotation, necessitating manual updating.

To streamline operations, you can establish a Payment Terms Template and easily reapply it as needed.

1.3 Adding Payment Terms to Documents 

After creating the Payment Terms Template, you can utilize it in both sales and purchase transactions. Depending on the Payment Terms’ settings and the transaction amount, a payment schedule will be established, specifying a Due Date for each payment installment.

Note: The Payment Schedule can be shown in the Print View using the Print Format Builder.

2. Related Topics

1. Sales Invoice
2. Purchase Invoice