RisingERP - Payment Terms

Payment Terms

Payment Terms in RERP assist in establishing a structured timetable for conducting transactions.

A Payment Term outlines a particular payment framework, like 60% payment on shipping and 40% upon item delivery. This feature enables businesses to save payment terms within RERP, seamlessly integrating them into various documents throughout the sales/purchase cycle. RERP automates the creation of General Ledger entries in accordance with the specified terms.

In RERP, the Payment Terms form primarily defines percentage allocations, while the actual payment schedule is effortlessly implemented using the Payment Terms Template.

These Payment Terms can be applied to the following documents:

1. Sales Invoice
2. Purchase Invoice
3. Sales Order
4. Purchase Order
5. Quotation

To navigate to Payment Terms, follow the path: > Home > Accounting > Accounting Masters > Payment Terms



Creating a Payment Term:

1. Access the Payment Term list and click on New.
2. Assign a name to the Payment Term (e.g., 60% post-shipment).
3. Define the Invoice portion. If, for instance, 60 is entered, the portion will represent 50 percent of the Invoice amount.
4. Choose a Due Date type.
5. Specify the credit days, indicating the number of days after which the remaining amount must be settled.
6. Save.

Explanation of Fields:

1. Payment Term Name: The designated name for the Payment Term.
2. Due Date Based On: Determines how the due date for the Payment Term is calculated.
3. Invoice Portion: Specifies the percentage of the total invoice amount to which the Payment Term applies.
4. Credit Days (optional): Indicates the number of days or months of credit allowed.
5. Description (optional): Offers a concise description of the Payment Term.

Setting up Discount on Early Payments:

To incentivize early payments, discounts can be configured within the Payment Term. Key configurations include:

1. Discount Type: Default is Percentage but can be changed to Amount.
2. Discount: Specified as a Percentage or Amount (e.g., 10% or ₹ 5,000).
3. Discount Validity Based On: Similar to the Due Date Based On, this field determines the basis for discount validity.
4. Discount Validity: Specifies the number of days or months the discount is valid concerning the invoice date.

This configured discount is automatically applied when creating a Payment Entry against a relevant invoice.

Note: The early payment discount is only applicable to Payment Entries made directly from an individual invoice.

Payment Terms in Converted Documents:

When converting or copying documents in the sales/purchase cycle, the attached Payment Terms are also duplicated. However, adjustments may be needed when creating a Sales Order from a Quotation to ensure the Due Date aligns with the updated terms.

To enhance usability, a Payment Terms Template can be established for easy reselection.

Adding Payment Terms To Documents:

Once the Payment Terms Template is set, it can be seamlessly applied to sales and purchase transactions. The defined value for Payment Terms, in conjunction with the transaction value, determines the payment schedule, outlining a Due Date for each payment segment.