Payment Terms—Exercises

IMPORTANT
It is extremely important that you set up and work within your own company to maintain your data integrity. If you work within any other company, your exercises will not function as intended and the data of other students might be affected. Predictable exercise results require that your data is isolated in your own company.

Main Exercises

Payment Term

Purpose: The purpose of this exercise is to show you how to set up the lead time between an entered invoice (the invoice data) and the payment to be processed. The payment term will then be available when you enter suppliers, supplier invoices, customers, and customer invoices. 

Windows:
Payment Terms
Payment Term

  1. Open the Payment Terms window, and create a new record (F5).
  2. Enter a new payment term following the example information in the table below as a guide.
Payment Term Payment Term Description Use Commercial Year Tax Distribution Consider Payment Vacation Periods Block For Direct Debiting Exclude  From Credit Control Limit Suppress Amount Apply Cash Discount to FA Acquisition Values
15 15 days Not Checked Even Not Checked Not Checked Not Checked Not Checked Checked *)
  1. Save the information (F12).
  2. Select your new payment term, right-click and select Payment Term Details
  3. Click the table and select a new record (F5).
  4. Enter a new installment using the information in the table below. Leave the rest of the fields empty.
Installment Number Number of Free Delivery Month Days to Due Date Net Amount Percentage
1 0 15 100%
  1. Save the information (F12).

Note: The Use Commercial Year check box is checked when you want each month to be considered to be an even 30 days for payment term purposes rather than the true number of days that are in a month.  The Tax Distribution selection will always be Even unless you have an installment plan that requires all taxes to be paid on the first installment.

Payment Term with Specific Due Dates 

Purpose: The purpose of this exercise is to show you how to set up a payment term with a number of installments. The installments will then automatically create an installment plan when you enter supplier and/or customer invoices.

Windows:
Payment Terms
Payment Term

  1. Open the Payment Terms window, and create a new record (F5).
  2. Enter a new payment term using the example information in the table below as a guide.
Payment Term Payment Term Description Use Commercial Year Tax Distribution Consider Payment Vacation Periods Block For Direct Debiting Exclude  From Credit Control Limit Suppress Amount Apply Cash Discount to FA Acquisition Values
45 45 days Not Checked Even Not Checked Not Checked Not Checked Not Checked Checked *)

 

  1. Save the information (F12).
  2. Select your new payment term, right-click and select Payment Term Details
  3. Click the table and select a new record (F5).
  4. Enter a new installment using the information in the table below. Leave the rest of the fields empty.
Installment Number Number of Free Delivery Month Days to Due Date Net Amount Percentage Specific Due Day 1 Specific Due Day 2 Specific Due Day 3
1 0 45 100% 1 11 21
  1. Save the information (F12).  
  2. The Specific Due Days are used in order to schedule all payments or receipts for up to three days of the month.  In the example shown, all payments using this pay term would be due on either the 1st, 11th, or 21st day of the month, whichever is closest to the actual calculated date.  The actual date is calculated by adding 45 days to the Pay Term Base Date.

Payment Term with more than one Installment

Purpose: The purpose of this exercise is to show you how to set up a payment term with a number of installments. The installments will then automatically create an installment plan when you enter supplier and/or customer invoices.

Windows:
Payment Terms
Payment Term

  1. Open the Payment Terms window, and create a new record (F5).
  2. Enter a new payment term using the example information in the table below as a guide.
Payment Term Payment Term Description Use Commercial Year Tax Distribution Consider Payment Vacation Periods Block For Direct Debiting Exclude  From Credit Control Limit Suppress Amount Apply Cash Discount to FA Acquisition Values
T4 4 installments Not Checked Even Not Checked Not Checked Not Checked Not Checked Checked *)
  1. Save the information (F12).
  2. Select your new payment term, right click and select Payment Term Details.
  3. Right-click and select Automatic Installment Plan.
  4. Enter data according to the table below. Leave the rest of the fields empty.
No of Installments Number of Free Delivery Month Days to Due Date
4 0 15
  1. Select OK.
  2. Four installment rows will be automatically created in the Payment Term Details window.
  3. Save the information (F12).

Note: The net amount is equally distributed among the 4 installments. The data can be edited as long as the sum of the net amount percentage totals 100.  These rows can be manually entered if preferred.

Payment Term with Discount

Purpose: The purpose of this exercise is to show you how to set up a new payment term and include a discount with it.

Windows:
Payment Terms
Payment Term

  1. Open the Payment Terms window, and create a new record (F5).
  2. Enter a new payment term using the example information in the table below as a guide.
Payment Term Payment Term Description Use Commercial Year Tax Distribution Consider Payment Vacation Periods Block For Direct Debiting Exclude  From Credit Control Limit Suppress Amount Apply Cash Discount to FA Acquisition Values
3D 30 days discount, 5% within 5 days Not Checked Even Not Checked Not Checked Not Checked Not Checked Checked *)
  1. Save the information (F12).
  2. Select your new payment term, right-click and select Payment Term Details.
  3. Click the table and select a new record (F5).
  4. Enter a new installment using the information in the table below. Leave the rest of the fields empty.
Installment Number Number of Free Delivery Month Days to Due Date Net Amount Percentage
1 0 30 100%
  1. Save the information (F12).
  2. In the Payment Term window, highlight your installment row, right-click and select Payment Term Discount.
  3. Make sure that the payment term you just entered appears in the header portion of the window.
  4. Create a new record (F5), and enter a new discount rule using the information in the table below.
Days for Discount Discount Percent Affect Setting of Planned Due Date
5 5 Checked
  1. Save the information (F12).

Payment Term with Intervals and Fixed Discount Dates

Purpose: The purpose of this exercise is to show you how to use intervals in a payment term to adjust due dates.  The payment term will then be available when you enter suppliers, supplier invoices, customers, and customer invoices.  A company chooses to use intervals if they want to specify which day a payment is to be made based on the day of the month that the invoice is created.

Windows:
Payment Terms
Payment Term

  1. Open the Payment Terms window, and create a new record (F5).
  2. Enter a new payment term using the example information in the table below as a guide.
Payment Term Payment Term Description Use Commercial Year Tax Distribution Consider Payment Vacation Periods Block For Direct Debiting Exclude  From Credit Control Limit Suppress Amount Apply Cash Discount to FA Acquisition Values
3I 30 Days with 5 Intervals Not Checked Even Not Checked Not Checked Not Checked Not Checked Checked *)
  1. Save the information (F12).
  2. Select your new payment term, right-click and select Payment Term
  3. Click the table and select a new record (F5).
  4. Enter a new installment using the example information in the table below as a guide. Leave the rest of the fields empty.
Installment Number Day From Day To Number of Free Delivery Months Days to Due Date Specific Due Day 1 Specific Due Day 2 Net Amount Percentage Discount Specified
1 1 10 0 30 5 11 20
1 11 20 0 30 15 21
1 21 31 0 30 25 1
2 1 15 0 30 7 16 80
2 16 31 0 30 22 1
  1. Save the information (F12).  
  2. The Specific Due Days are used in order to schedule all payments or receipts for up to three days of the month.  In this example, all payments for installment 1 for the interval from the 1st and the 10th of the month would be due on either the 5th or 11th day of the month, whichever is closest to the actual calculated date.  The actual date is calculated by adding 30 days to the Pay Term Base Date.  So, if the Pay Term Base Date on the invoice is the 17th day of the month, then the installment 1 payment would be due on the 15th and the installment 2 payment would be due on the 22nd day of the month.
  3. Select your payment term detail rows, right-click and select Payment Term Discount.
  4. Make sure that the payment term you just selected appears in the header portion of the window.  For each installment and interval combination, you are able to enter discount information.
  5. Create a new record (F5) for installment 1 and the first interval.  
  6. Enter a new discount rule following the example information in the table below.
Discount Percent Number of Free Delivery Months Days for Discount End of Month Specific Discount Day 1 Specific Discount Day 2 Affect Setting of Planned Due Date
5 0 10 Not Checked 12 18 Checked
  1. Save the information (F12).
  2. In the example, installment 1 for the first interval, there will be a 5% discount if the due amount is paid within 10 days on either the 12th or 18th whichever is closest to the Pay Term Base Date.
  3. Enter and save discount information for the other installment interval combinations as required.

Payment Vacation Periods

Purpose: The purpose of this exercise is to show you how payment vacation periods can change the lead time between an entered invoice (the invoice data) and the payment to be processed. The payment term will then be available when you enter suppliers, supplier invoices, customers, and customer invoices. 

Windows:
Payment Vacation Days

  1. Open the Payment Vacation Days window and create a new record (F5).
  2. Enter a new payment vacation period following the example information in the table below as a guide.
Payment Method Customer Start Date End Date New Payment Date
% % 12/27/2004 12/31/2004 1/3/2005
  1. Save the information (F12).
  2. Using the % sign in this example creates a payment vacation period that is available for all customers and all payment methods in your company.
  3. In order to enter data for a specific customer and payment method, click the table and select a new record (F5).  
  4. Enter a new payment vacation period following the example information in the table below as a guide.
Payment Method Customer Start Date End Date New Payment Date
CHK (select your payment method from list of values) 1000 (enter your customer) 11/22/2004 11/26/2004 11/29/2004
  1. Save the information (F12).

Note: If a Payment Vacation Period is in effect for the company or customer when a calculated installment due date occurs, then the due date will be adjusted to the New Payment Date.

*) As the actual cash discount is applied to FA acquisiiton values, you should select the Apply Cash Discount to FA Acquisition Values check box even for payment terms which do not automtically suggest cash discount (for the case that cash discount is manually added).