Configuring Payment Terms and Cash Discounts

You can enter the terms of payment in the company code, sales area, and purchasing organization segments of a customer or vendor master record (Business Partner).

The terms of payment that are defaulted when posting an invoice depend on where the invoice is created.

The invoice can be created in any one of the following locations:

When you enter a vendor invoice, you can also set a fixed amount as a cash discount or fixed cash discount percentage rate. The cash discount is independent of the payment period or date. To set a fixed cash discount or fixed cash discount percentage rate, you must make the appropriate entry in the Cash Discount field.

The following options are available for posting the terms of payment in credit memos:

• Invoice-related credit memos
• Other credit memos

You can link the credit memos to the original invoice by entering the invoice number in the Invoice Reference field during document entry. In this case, the terms of payment are copied from the invoice to the credit memo. Both the invoice and the credit memo are then due on the same date.

In the Customer Master Record there is an own Payment Term field for Credit Memos Credit Memo Pyt Term scheduled. It is located directly underneath the normal Payment terms if the settings of the field status allow to show it. If there is an assigned payment term, it is proposed by the system, when you insert a credit memo.

The terms of payment in credit memos that are not linked to their original invoices are ignored. These credit memos are due on the baseline date. To activate the payment terms on these non-invoice-related credit memos, enter a V in the Invoice Reference field when entering the document.

Day limits enable date-specific terms of payment in a single terms of payment key.

You can define several versions of the terms of payment, with each version having a different day limit.

The day limit is the baseline date up to which the payment term version applies. For terms of payment that are dependent on a day limit (for example, if the baseline date is before the 15th of the month), you can enter two-part terms of payment under the same terms of payment key. The entry for the specified day limit is added to the terms of payment key. This results in two entries where different terms of payments can be defined.

The following terms of payment require the specification of a day limit:

• Documents with an invoice date up to the 15th of the month are payable on the last day of the following month.

• Documents with an invoice date after the 15th of the month are payable on the 15th of the month after the following month.

You can specify the following terms of payment for incoming invoices and incoming credit memos:

While defining terms of payment, you can control payments by using a block key and entering a payment method. You can use the block key (= blocking reason) to block line items for payment during posting. Then, the payment program cannot collect and not pay for the item. This is particularly useful for vendor invoices. First, you always set a payment block. A second person checks the invoice and removes the payment block (dual control principle).

The payment method determines the procedure to be used for payment (check, transfer, and bill of exchange).

You can set the block key and the payment method in the following transactions:

• During posting
• In the customer or vendor master record (company code segment; Business Partner role FI)
• In the terms of payment

The block key and the payment method defined in the terms of payment are defaulted in the line item when the terms of payment are used.

The system uses the baseline date to calculate the due date for the invoice and the cash discount terms. The baseline date can either be proposed or entered manually. The following default values can be applied to the baseline date: posting date, document date, and entry date.

For the calculation of the baseline date, you can use two methods:

• Fixed day

  This is a day that can be used to overwrite the calendar day of the baseline date. For example, the fixed day can always be the 15th of the month.

• Number of additional months

  These are the months that need to be added to the calendar month of the baseline date.

For further information about the behavior of SAP S/4HANA with default values for the terms of payment baseline date and changing the date by adding months, refer to note 162885.

To calculate the cash discount, enter a percentage rate in the terms of payment. In the same line, enter the number of days for which the percentage is valid. If needed, you can add fixed days and months in the terms of payment line.

The days and months specified in the terms of payment are used with the baseline date to calculate the correct cash discount amount for the payment date.

You can enter up to three cash discount periods.

Cash discount amounts can be entered manually, or by configuring SAP S/4HANA to use the rates in the terms of payment automatically. You can change the cash discount after posting the invoice.

When you clear an open item on a customer or vendor account, SAP S/4HANA posts the applicable cash discount automatically to an account for cash discount expense or cash discount received.

Define the accounts for cash discount expense or cash discount revenue in the configuration.

If you post a vendor invoice with a document type for the net procedure, SAP S/4HANA reduces the cash discount amount from the expense or balance sheet account automatically. SAP S/4HANA then posts the same amount to a cash discount clearing account to clear the posting.

When you use the net procedure, the cash discount amount is automatically posted along with the invoice.

When the invoice is paid, SAP S/4HANA carries out a clearing posting to the cash discount clearing account.

If the invoice is paid after the cash discount deadline, the cash discount loss is posted to a separate account.

The cash discount clearing account must be managed on an open item basis.