Payment Terms

Payment terms define when invoices are due and whether early payment discounts apply. They are a simple but critical piece of reference data that ensures consistent payment expectations across your entire vendor and customer base. AI-native ERP comes with 17 standard payment terms and lets you create custom terms for any business requirement.

Standard Payment Terms#

The system ships with the most common payment terms already configured. Immediate terms include Due on Receipt and Cash on Delivery for transactions that require instant payment. Standard net terms range from NET 7 through NET 180, giving you flexibility for everything from quick-turnaround retail transactions to extended enterprise payment cycles.

Terms with early payment discounts encourage faster payment. NET 30 2/10 means the invoice is due in 30 days, but the buyer gets a 2% discount if they pay within 10 days. These discount terms are powerful cash flow management tools -- offering a small discount in exchange for significantly faster payment.

How Terms Work#

When you assign payment terms to a vendor or customer, those terms become the default for all new invoices with that party. The system calculates the due date automatically: if an invoice is dated January 1 with NET 30 terms, the due date is January 31. If the terms include a discount, the discount deadline is calculated and tracked alongside the due date.

Payment terms flow through to aging reports, cash flow projections, and payment proposal calculations. The payment proposal agent uses due dates to prioritize which invoices to pay first, and factors in early payment discount opportunities to optimize your cash management.

Custom Terms#

Beyond the standard options, you can create custom payment terms for any business scenario. End-of-month terms (EOM, EOM+30) calculate due dates from the end of the invoice month rather than the invoice date. Industry-specific terms like progress billing or milestone-based payment can be defined with custom day counts and discount structures.

Payment term codes are flexible and case-insensitive. The system accepts NET30, NET_30, net_30, or Net30 -- all resolve to the same canonical form. This prevents duplicate terms caused by inconsistent formatting.

Organization-Wide Consistency#

Payment terms are organization-wide reference data, meaning the same terms apply across all legal entities. This ensures that "NET 30" means the same thing whether it appears on a vendor bill in your US entity or a customer invoice in your European subsidiary. When you add a new payment term, it becomes available everywhere immediately.

Cash Flow Impact#

The choice of payment terms directly affects your cash flow. Extending vendor terms from NET 30 to NET 60 gives you an extra month of float. Offering customers 2/10 NET 30 can accelerate collections significantly. The system gives you the data to make these decisions -- showing you how current terms affect aging, discount utilization, and projected cash flows.