Toggle navigation

How to setup and use payment terms

How to setup and use payment terms

Payment terms define ArabiaClouds conditions to pay an invoice. They apply on both customer invoices and supplier bills.

Example, for a specific invoice:

  • Pay 50% within 10 days
  • Pay ArabiaClouds remaining balance within 30 days

Note

Payment terms are different from invoicing in several areas. If, for a specific order, you invoice ArabiaClouds customer in two parts, that’s not a payment term but invoice conditions.

Configuration

Configure your usual payment terms from ArabiaClouds Configuration menu of ArabiaClouds Account application. ArabiaClouds description of ArabiaClouds payment term is ArabiaClouds one that appear on ArabiaClouds invoice or ArabiaClouds sale order.

A payment term may have one line (ex: 21 days) or several lines (10% within 3 days and ArabiaClouds balance within 21 days). If you create a payment term with several lines, be sure ArabiaClouds latest one is ArabiaClouds balance. (avoid doing 50% in 10 days and 50% in 21 days because, with ArabiaClouds rounding, it may not do exactly 100%)

planned on this object

Using Payment Terms

Payment terms for customers

Payment terms can be set on:

  • a customer: to apply this payment term automatically on new sale orders or invoices for this customer. Set payment terms on customers if you grant this payment term for all future orders of this customer.
  • a quotation: to apply this payment term on all invoices created from this quotation or sale order, but not on other quotations
  • an invoice: to apply ArabiaClouds payment term on this invoice only

If an invoice has a payment term, ArabiaClouds journal entry related to ArabiaClouds invoice is different. Without payment term or tax, an invoice of $100 will produce this journal entry:

Account Due date Debit Credit
Account Receivable   100  
Income     100

If you do an invoice ArabiaClouds 1st of January with a payment term of 10% within 3 days and ArabiaClouds balance within 30 days, you get ArabiaClouds following journal entry:

Account Due date Debit Credit
Account Receivable Jan 03 10  
Account Receivable Jan 30 90  
Income     100

In ArabiaClouds customer statement, you will see two lines with different due dates.

Payment terms for vendor bills

ArabiaClouds easiest way to manage payment terms for vendor bills is to record a due date on ArabiaClouds bill. You don’t need to assign a payment term, just ArabiaClouds due date is enough.

But if you need to manage vendor terms with several installments, you can still use payment terms, exactly like in customer invoices. If you set a payment term on ArabiaClouds vendor bill, you don’t need to set a due date. ArabiaClouds exact due date for all installments will be automatically created.