The document outlines payment terms and conditions, including: default terms of payment that are populated based on where an invoice is created (e.g. financials, sales order, purchasing); installment payments; cash discount base amounts; and how cash discounts are posted via a gross procedure where the system automatically applies discount rates from payment terms and posts discounts to expense or income accounts when open items are cleared.

1. Payment Terms

2. The system needs following data:-
• Base line date
• Cash discounts terms
• Cash discounts percentage rates

3. Terms of payment in invoices

4. The terms of payment defaulted when posting an invoice
depends on where the invoice is created:-
• If the invoice is created in financials, the terms of payment from the
company code segment are defaulted.
• If a customer is created a sales order management, the terms of
payment from the sales area segment are defaulted.
• If a vendor invoices is created in purchasing management, terms of
payment from the purchase organization segment are defaulted.

5. Installments payments:-

6. Cash discount base amount:-

7. Posting cash discount – Gross Procedure

8. • The cash discount amount is entered either manually or automatically
by the system using the rates in the terms of payment.
• When an open item on a customer or vendor account is cleared, the
possible cash discount is posted automatically to an account for “cash
discount expense” or “cash discount received”.