Credit Terms Codes

The credit terms code enables the user to record several parameters on which are based the following calculations:

·     The payment deadline.

·     The payment deadline to profit by a specific discount.

When a purchase order is created during Purchase Order Maintenance, a default credit terms code is retrieved from the Vendor Master File.  This value can be manually overridden by the user with another valid value on the Reference File by entering 99.  The 99 code means that the credit terms data will be entered specifically for this purchase order and probably will not be used again and thus does not need to be recorded on the Reference File.

The payment deadline dates are not system processed; the user must determine them manually.  The calculation is based on a start date defined by the From-Date-of code (FDO), which can have the following values:

1 - Accounting date

2 - Vendor invoice date

3 - Merchandise receipt date

From this start date, the end of the month is taken if the end of month flag is yes, then a number of days is added to obtain a second date,  and finally a delay in days can be added to the end of the month in which the payment date occurs.

For example, given a start date of February 10, 19XX, and net days of 60, the payment deadline date can be figured three different ways as shown in the following figure:

Payment Deadline Calculations

The calculation of the payment deadline date to profit by a discount is as follows.  From the start date, the end of the month is determined if the end of month flag is yes, then a number of days is added or a date is specified.

For example, given a start date of February 10, 19XX, four possible calculations can be used as shown in below:

Discount Payment Deadline Calculations