With billing terms, system administrators can create a list of commonly used payment options, including specifications for deposit requirements and opportunities for early payment discounts. These billing terms are available both for invoices your company sends to customers and for purchases your company makes.
Navigate to Menu > Accounting > Preferences > Billing & Payment Terms:
- Default Billing Terms — You can specify an existing billing term as the default option by clicking the Default Billing Terms field, then selecting an option from the list. New Company records will initially inherit this setting for both the Customer Billing Terms and Vendor Payment Terms fields.
- Additional Billing Terms — You can add new codes by clicking the highlighted field in the first blank line of the list. Enter the title and other billing terms settings (see below). New billing terms will be available in modules such as Companies, Orders, Invoices, Purchase Orders, and Purchases. You can remove an existing billing term by clicking the Delete icon () at the end of the line.
- Billing Terms Settings — For each billing term, you can specify the following settings:
- Deposit Pct (optional) — When the order or purchase is opened, it auto-generates a deposit invoice for the corresponding percentage of the total amount. (Read more about handling customer deposits.)
- Due Days — The number of days from the invoice or purchase date for calculating the due date
- Discount Pct (optional) — The amount that the invoice or purchase will be discounted if the payment is made within the discount period
- Discount Period (optional) — The number of days from the invoice or purchase date wherein an early-payment discount can be used
Early Payment Discounts
Using billing terms, you can easily offer early-payment discounts for customers.
You can also take these discounts on purchases when the right billing terms are offered by vendors. If a purchase uses a billing term that includes an early payment discount (e.g. Net 10 2%), that possible discount will be noted on the Purchases module when the purchase is opened, until the Discount Period is passed. aACE notes the Suggested Discount in the lower-right, below the Balance.
When the disbursement for the purchase is generated, aACE compares the Purchase date to the Disbursement date. If the disbursement is within the Discount Period, aACE automatically applies the Suggested Discount as an adjustment on the disbursement, and in the General Ledger, the early payment discount adjustment is applied to the GL Account specified in the Adjustment Codes preferences.