Setting Up Customer Terms - Finance Charges, Discounts & Due Dates
Finance Charges, Discounts, and when Payment is Due are covered under a broader heading called "Terms" and can be modified in Selling Details.
Finance charges are amounts added to an outstanding balance as a penalty for late payment. A finance charge is added to a customer’s statement. The amount paid by a customer to cover the charge is then recorded in the Receive Payments window. Click here to learn more about Finance Charges.
NOTE: Finance charges will never be added automatically to a customer invoice - they only appear on customer statements based on the terms of an invoice.
Discounts for early payments are amounts taken off of an invoice as a reward for early payment.
NOTE: Discounts will only be seen when entering the Receive Payment transaction.
Different Term Options
Payment is Due
These are the types of terms for payment and includes C.O.D. (Cash on Delivery), Prepaid, In a Given # of Days, On a Day of the Month, # of Days After EOM (End of Month), and Day of Month After EOM (End of Month).
Most of these terms are based on the date of the invoice recorded. For example, an invoice that was dated June 15, 20xx would have these terms:
- C.O.D: Due on June 15, 20xx
- Prepaid: Due on June 15, 20xx (already paid so this doesn't really matter)
- In a Given # of Days: However many days you set past June 15, 20xx (ie: 10 Days would equate to June 25, 20xx)
- On a Day of the Month: This you just choose the day of the month - so if you set the 1st-14th it will be due July 1st-15th, 20xx. If you set the 15th-EOM (End of Month) it will be due from the 15th of June to June 30th 20xx.
- # of Days After End of the Month: If you set this to zero it will be due on June 30, 20xx. If you set this to anything else it will be the corresponding number of days going forward from July 1st (including into the next year if you set it for 300 days or the like)
- Day of Month after EOM (End of Month): Will equate to July 1st-July 31st 20xx.
The number of days (based on the date of the invoice) that your customer will receive a discount. This can be 0 if you do not give discounts or any number of days entered in.
For example, if your invoice is dated June 15, 20xx and your discount days is set as 10 your customer will receive a discount automatically (when you apply payment to the invoice) up until June 25, 20xx.
Balance Due Days
How many days from the date of the invoice that the invoice is due to be fully paid. If you asses finance charges it will be based on this.
As an example, if your invoice is dated June 15, 20xx and your balance due date is set as 30 (with terms being In a Given # of Days) then finance charges will be calculated on any payment after July 15, 20xx.
Discount for Early Payment
The percentage that you are going to give off the invoice.
% Monthly Charge for Late Payment
The percentage that you are going to add on to a customer's monthly statement based on the invoice. This is only calculated on a month by month basis and it just adds the same percentage on every month - it does not aggregate.
To Change Default Terms for All New Customer Card Files
This will change the default terms for new customer and lead card files going forward. It will not change card files or invoices that were already created.
- Go to the top menu bar and select Setup > Preferences > Sales.
- Click on the Terms icon on the lower left corner of the window.
- Enter your default terms that will apply to any new cards created in your cards list.
- Click OK to save the information.
To Change The Terms On The Customer's Card File
This will change the default terms for new sales associated with the card file going forward. It will not change invoices that were already created.
- Click on the Card File Command Center.
- Click on Card List.
- Highlight the Customer card and select Edit.
- Click on the Selling Details tab. At the bottom of this window, you will see the terms for this customer.
- After you have made the appropriate corrections, click OK to save the updated information.
To Change the Terms on a Specific Invoice
- Go to Setup > Preferences > Security.
- Take the check mark out of the first option in the list, "Transaction Can't be Changed; They Must be Reversed".
- Open the invoice that you want to change the terms for.
- Click on the double gray arrows to the right of the word Terms (in the upper right area of the sale). You will now be in the Credit Terms window for this invoice.
- Now enter the correct terms for the customer invoice. Click OK to accept the changes and close the Credit Terms window.
- Now click OK to accept the changed information to the invoice.