Add a term—Accounts Receivable

Add a term to establish rules for extending credit to customers. After you add a term, you can select the term when you enter an Accounts Receivable transaction. You can also associate terms with customers.

1. Go to Accounts Receivable > Setup > More and select Add (circle) next to Terms.

2. Enter the Name of this term; for example, 2% 10 Net 30. This name appears on AR sales invoice and customer pages.
3. In Description, enter a note about the purpose and use of this term, for example, 2% discount if paid 10 days from AR sales invoice. Due on day 30.

4. The Due date is a combination of the days and what the days references:

   • To set terms that reference the number of days from the AR sales invoice date, such as Net 30, type the number of days in Day, and select from AR sales invoice or AP supplier invoice date from the dropdown list.
   • To set a day on a month referenced from the AR sales invoice date, type the day of the month in Day, and select a month setting from the adjacent pick list. For instance, to set terms for the 15th of the month after the AR sales invoice date, type "15" in Day, and select "of next month from AR sales invoice or AP supplier invoice date" in the dropdown list.

5. The Discount is a combination of the days, what the days reference, the dollar or percent discount, and the number of grace days. In addition, you can set how the system calculates discounts for transactions using this term.

   • To set a discount that references the number of days from the AR sales invoice date, such as 2%-10:

     1. Type the number of days in Day.
     2. Select from AR sales invoice or AP supplier invoice date from the dropdown list.
     3. Type the discount amount in Amount.
     4. Select Fixed amount or Percent from the dropdown list.
     5. In the Grace days field, enter the number of days before the discount is withdrawn.

   • To set a discount based on a day on a month referenced from the AR sales invoice date:

     1. In Day, type the day of the month.
     2. Select a month setting from the dropdown list.
     3. Type the discount amount in Amount.
     4. Select Fixed amount or Percent from the dropdown list.
     5. In the Grace days field, enter the number of days before the discount is withdrawn.

   • You can set how the system calculates discounts in transactions that use this term. You can calculate the discount

     • based solely on the Line-items total, excluding added charges (such as taxes and shipping).

       When you use the Canadian tax solution, you can set up your terms to calculate GST correctly on the discounts applied in a transaction. For more information, see Capture tax on term discounts.

     • on the AR sales invoice total, including all charges.
     In Configure Accounts Receivable, you can set up your company to automatically apply discounts when you record a payment receipt.

6. To set a penalty for paying after the due date, in the Penalty section set the following:

   1. In Cycle, set cycle to the time span in which the penalty accrues, such as Weekly, Biweekly, Monthly, and so on.
   2. In Amount, type the penalty amount.
   3. Select Fixed amount or Percent from the dropdown list.
   4. In the Grace days field, enter the number of days after the due date that the penalty takes effect. For example, you can use the grace period to compensate for the delay caused when a cheque is mailed within the penalty period, but is delayed in the mail.
   Penalties are manually applied. Go to Accounts Receivable > All > Payments > Penalties to explicitly apply a penalty.