PAYMENT TERMS

General:
Ÿ The day limit is the calendar day up to which the payment term may apply, allowing date
dependent payment terms.
Ÿ The description of a payment term consists of three elements:
A system determined explanation which is a sales related description for printing on invoices, and
a user defined explanation.
Ÿ The account type allows for mutual or exclusive use of a payment term within a sub-ledger.
Payment Control:
Ÿ An invoice is normally blocked by using a block key on the line item; however, a block key
may be defined in a payment term.
Ÿ A payment method is normally entered in the line item; however, a payment method may be
defined in a payment term.
Ÿ A block key and payment method defined in a payment term will default in the line item
if the payment term is assigned in the business partner master record.

An invoice can be paid over several months using an installment plan, or a portion of the invoice
amount may be retained for payment at a later date.
The total invoice amount is divided into appropriate amounts as per the plan and each separate
amount is then due on different dates.
The system will perform the above function automatically by using a holdback/retainage payment
term.
A holdback/retainage term is defined by setting the holdback/retainage flag and not assigning
discount days or percentages.
The holdback/retainage payment term is further defined using an installment number, installment
percentage rate and an installment payment term.
The percentage rates specified must total 100%.
The system will create a line item for each installment specified.
Each line item amount will be equivalent to the installment percentage rate of the total primary
amount, and the sum of the line item amounts will equal the total primary amount.
The line items will have payment terms as defined by the installment plan.