Contents
Introduction ... 2 Configuration ... 2 System demo ... 10
Introduction
Terms of Payment or commonly known as "Payment Term" is one of the key areas used in SD to define cash discount percentages based on the payment due dates for a specific customer.
Based on the way you have customized, the behavior during payment receive will differ. Therefore let's go through the important fields in the "Terms of Payment" customizing to get a basic understanding of how it works together with financial payment receipt.
Configuration
Terms of Payment is customized under below IMG Path; IMG Path:
Eg: Payment Term: 0003 (14 days 3%, 20/2%, 30 net) The meaning of this payment term is as follows;
If customer pays within 14 days, he is eligible for 3% cash discount
If customer pays within 20 days, he is eligible for 2% cash discount
The total amount is due on 30 days. After that it will be shown as a overdue payment from the customer
Payt Terms -
This field is used to define payment term ID for the "Payment Term". In the customer master you can assign this payment term under Sales area / Billing tab.
Sales text -
Description of the payment term is specified here.
Day limit -
This field is used to specify the date of the month, which the corresponding payment term is valid. Let's say for example you have a payment term which valid till 15th of the month. Then you need to specify before 15th of the month how it should behave as well as after 15th of month how it should behave. The date limit (15) is specified under this field.
Therefore system allows you to define two-part payment term under same ID. During processing, the terms of payment will be expanded by the day limit specified here. Therefore you get the flexibility of specifying 2 entries in which different terms can be defined.
Eg:
o Posting documents with an invoice date on or before the 15th of the month are payable on the last day of the next month
o Posting Documents with an invoice date after the 15th of the month are payable on the 15th of the month after the next month.
Own explanation -
This field can be used to specify custom description of the payment term. As soon as you specify your own description, the system generated descriptions in the lower area will be replaced by the custom description.
Account type -
Here you have to mark whether it can be assigned to customer or vendor. If you didn't mark
"Customer" tick box, then you will not be able to assign such a payment term in to customer master. You need at least mark one account type.
Base line date calculation: Fixed day -
This field is used to specify the calendar day which the system overwrites the day of the base line date for the payment.
Eg: In the below case, the base line date will be always 30th of the same month.
Base line date calculation: Additional months -
This is to specify number of months which the system should add to the calendar month of the base line date of the payment.
Eg: In the below case, the base line date will be always 15th of the next month.
Block key -
Under this field you can specify a payment block key. These keys are pre-defined in the system.
When entering postings to a customer account which has such a block key, the blocking reason is proposed together with the terms of payment.
Payment method -
This is to specify how payments are to be made. Eg: Bank transfer, by cheque. These payment methods have to be maintained in the customer master.
If an open item is to be paid using a specific payment method, it has to be entered in the open item. The terms which have been defined for the payment method must be fulfilled for the payment.
Default for baseline date -
Under this section, you can specify the base line date which can be used to determine overdue payments.
Eg: For customer billing documents, we use the "Posting date". Then to calculate the overdue payment, the accounting document posting date will take as the base date.
Installment payment -
Mark this field if the invoiced amount is to be broken down into partial amounts with different due dates.
Rec. Entries: Supplement fm Master -
This check box should be marked to controls whether the terms of payment in a recurring entry and to be taken from the customer master record. If There is no payment term entered in the original document, it will be taken from the customer master.
Payment term breakdown section -
Under this section, you can specify the cash discount percentage granted automatically, based on the number of days from the baseline date.
Eg: As per below example;
o If the payment received within 14 days from the base line date, 3% discount will be granted
o If the payment received within 20 days from the base line date, 2% discount will be granted
Fixed date and Addition months -
If you want to specify a specific calendar date where the payment is due in the same month of next month, you can use this section.
As per below example,
o If the payment is received before end of same month, customer will get 4% discount o If payment is received before 15th of next month, customer will get 2% discount o Full payment is due after 2 months from the base line date.
As per below example,
o If the payment is received before end of next month, customer will get 2% discount o Full payment is due on 15th after 2 months from the base line date.
Please note, you can either enter "No of days" or "Fixed dates", not both.
Explanations -
The relevant explanations will be automatically determined, based on the percentage and no of days, fixed date, additional months you specify in the "Payment term" section.
System demo
Now let's do a test cycle with a customer who has a payment terms assigned to customer master.
Customer - AW01
Payment term - 0003 (14 days 3%, 20/2%, 30 net)
As per the below configuration in the payment term, customer should receive 3% discount if the payment is received within 14 days. If payment received within 20 days, customer is eligible for 2% discount. Payment is due on 30 days.
Payment term is assigned to the customer master under sales area data / billing documents tab
When the sales order is created, same get copied to the header and the item. (Under "Billing Document" tab)
Same will be flows to customer billing as well.
When you go in to the accounting document relevant to this billing document, you can see the payment term discount amounts based on due dates
Now let's check the customer open item display report - (Transaction - FBL5N)
There you can see the net is due on 30 days after the posting date. (Base line date in the payment term was "Posting date")
Now let's take a payment against this document and see the effect of payment term (Since it is within 14 days, I should get 3% discount) -> Transaction: F-28
Author: Anupa Wijesinghe
E-Mail: anupaw@gmail.com / anupaw@learnsaptips.com Website: www.learnsaptips.com
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