About payment terms

You need to plan the payment terms your company offers to customers, as well as outline the details of the payment terms offered to your company by suppliers, which are already defined, in preparation for entering them into the system.
We recommend that you decide on the following points when you plan each set of payment terms:

• The length of the payment period and the ways its due date is calculated.
• The cash discount conditions and the way they are affected by the length of the payment period.
• The number of instalments and the instalment payment schedule (if the company offers instalment buying).
  
  You can configure a cash discount for only a single-instalment payment.

If your company has been operating for some time, you already have established payment terms.
We recommend that you compare the payment terms your company offers to customers and the payment terms offered to your company by suppliers, because in Visma.net ERP, you can use the same payment terms for both customer payments and payments to suppliers, if needed.

These are the general steps you need to perform to create a set of payment terms by using the Payment terms (CS206500) window:

1. You specify a descriptive ID for the payment terms you want to configure.
   The length of an ID can be up to 10 Unicode symbols.
   
   We do not recommend using any special symbols in the IDs of entities.
2. You define the scope of the payment terms: whether they apply to only customer documents, only supplier documents, or both types of documents.
3. You configure how a due date is calculated for a document.
4. Optional: You configure the cash discount conditions.
5. Optional: If needed, you change the default instalment type of payment terms, which is Single, to Multiple and define the number of instalments and their payment schedule.

By using the payment terms that have been manually or automatically assigned to a document, the system calculates the due date of the document.
If a cash discount is applied, the system also calculates the end date of the cash discount period and the cash discount amount for the document.

In Visma.net ERP, you can assign payment terms to the following types of documents:

• Customer ledger: Invoices, debit notes, and overdue charges
• Supplier ledger: Purchase invoices and credit adjustments

To make the system automatically assign payment terms to customer documents, you assign the payment terms to customer classes, and by default, a customer is assigned the payment terms specified for the customer class it belongs to. You can manually specify the payment terms for each customer (or override the class setting) by using the Customers (AR303000) window. When you create a document and select a customer, the system automatically associates with the document the payment terms specified for the customer.
(The payment terms for the document can also be overridden.)

Automatic assignment of payment terms to supplier documents is configured similarly to automatic assignment of payment terms to customer documents, with terms being assigned to supplier classes. You also can manually specify or change the payment terms for each supplier by using the Suppliers (AP303000) window.

Certain settings specified for the payment terms in the Payment terms (CS206500) window determine the payment period: the time interval that starts when a customer purchases a product or a service (on the document date) and ends when the customer's payment is due. In Visma.net ERP, you do not specify the length of the payment period; you instead specify the way the document due date will be calculated based on the date of the document's creation.

By specifying the appropriate Due date type setting in the Payment terms (CS206500) window, you can calculate the due date based on one of the following factors:

• A day in a month (the Day of next Month, End of month, End of next month, and Day of the month options):
  
  You can specify a day of the month (in the Due day 1 field) to be the due date for all documents issued before this day, or the end of the current or next month can be the due date.
• A fixed number of days (the Fixed number of days and Fixed number of days starting next month options):
  
  You can specify the period of time (in the Due day 1 field) that is used to calculate the due date, based on the document date or the first day of the next month.
  
  (To determine the due date of the document, the system adds the specified number of days to either the document date or the first day of the next month.)
• Multiple custom dates (the Custom option):
  
  With this option selected, you can set two time intervals for the document dates and specify a due date for each interval.
  
  The parameters for configuring the first interval are Due day 1, Day from 1, and Day to 1, and the parameters for configuring the second interval are Due day 2, Day from 2, and Day to 2.

  The following rules are applied to each set of days:

  • The end day should be greater than the start day.
  • If the value of the Due day N parameter is greater than (or equal to) the value of the Day to N parameter, the due date will be in the current month.
  • If the value of the Due day N parameter is less than the value of the Day to N parameter, the due date will be in the next month.

For more examples of the ways a payment period is calculated, see: Examples of credit and cash discount periods

Outstanding balances can be paid in a single instalment or multiple instalments.

To configure instalment payments, select the Multiple option in the Instalment type list.

By default, the instalment type for new payment terms is Single.
You then specify the number of instalments, the frequency or schedule, and the instalment method.

You can configure either an instalment frequency or an instalment schedule.

To configure a frequency, in the Instalment frequency field, you can select the interval between instalments.

The following payment frequency options are available:

• Weekly: Instalments will be one week apart.
• Monthly: Instalments will be one month apart.
• Semi-monthly: Instalments will be a half a month apart.

To determine how the amounts of instalments are calculated for the selected frequency, select one of these options in the Instalment method list:

• Equal parts: The document total amount (with all the applicable taxes added) is divided into equal parts.
• VAT in first instalment: The amount of the document (the total before VAT) is divided into equal parts, and the VAT amount is added to the first instalment.

To configure an instalment schedule, you leave the Instalment frequency field blank and select the Split by percent in table instalment method.

The instalment amounts are calculated according to the percentages that you specify for each instalment in the Instalments schedule table.

For each instalment, you can specify the number of days from the due date and the percent of the total document amount.
The first instalment (which is due on the due date) should have 0 in the Day column, and other instalments' dates are specified with the respect to the due date.

You can configure a cash discount for only single-instalment payment terms.
The cash discount is available for a time interval (that is, the cash discount period) that starts on the document date and ends in the number of days specified in the Cash discount settings section. The cash discount period falls within the payment period.
If custom due dates are set, discount settings are applied to both intervals.

The length of the cash discount period is defined by the following parameters:

• Discount type:
  
  This parameter defines the method of calculating the end date of the discount period (which is similar to the method of calculating the due date).
  
  The option you select in the Due date type field determines the options available for selection in the Discount type field.
  
  If the End of month option is selected in the Due date type field, configuration of a cash discount is not available.
• Discount day:
  
  This parameter determines the number of days or the particular day of the month, depending on the method selected in the Discount type field.

For examples of the ways a cash discount period is calculated, see Examples of credit and cash discount periods

A cash discount is an amount that is calculated by applying the percent specified in the Discount % field to the total amount of the document.

When you enter a payment for the document during the cash discount period, the system deducts the calculated discount amount from the total amount of the document and generates the payment for the amount or the result of the deduction.

If a cash discount is applied to a document, it may or may not affect how the system calculates the taxable amount of a document.
You may indicate to the system how to calculate the taxable amount for a VAT application in the VAT (TX205000) window.
For details about how the system calculates a taxable amount of a document if a cash discount should be applied to the document, see: About VAT settings