Creating pay term

The pay term defines the terms of payment that you can apply to a purchase transaction.

Select the “Create Pay Term” link under the “Pay Term” business component.

The “Create Pay Term” page appears.

The system displays the following field:

Date Format

The format in which the date fields are displayed in this page. This format is displayed from the "User Preferences" business component based on the login user ID. In case the format is not defined, the system displays the date format from the “Enterprise Modeling” business component by default.

Enter the following fields in the “PayTerm” group box:

Pay Term	A unique code to identify the payment term (Alphanumeric, 25). Mandatory.
The system displays the following field, on clicking the “Create Pay Term” pushbutton:
Status	The status of the pay term. The system sets the status of the created pay term as “Active”.
Note: You can change the status of the pay term to “Inactive” in the “Edit Pay Term” activity, to disable it from future reference in other activities.
Enter the following fields in the “PayTerm” group box:
Pay Term Description	The textual description of the pay term (Alphanumeric, 80). Mandatory. Zoom facility available
Effective From	The starting date, in a range of effective dates, from which the payment term is applicable (Date Format). Mandatory. Ensure that this date is not earlier than the current server date or later than the ending effective date. The system sets the field to the current server date by default.
Effective To	The ending date, in a range of effective dates, till which the payment term is applicable (Date Format). Mandatory. Ensure that this date is not earlier than the current server date or the starting effective date.
Pay Term Type	Use the drop-down list box to select the type for the pay term. The system provides the options, “Advance” and “Net”. The system sets the field to “Net” by default.
Pay Term Category	Use the drop-down list box to select the category to which the pay term belongs. The system lists all the pay term categories that are defined in the “Create Common Category” activity of the “Logistics Common Master” business component that are in the “Active” status. The system sets this field to blank by default.
Pay Term Classification	Use the drop-down list box to specify the classification of the pay term. The system lists the following options: ‘Date Based' - Select this option if you wish to classify the pay term on the basis of dates. 'Days Based’ – Select this option if you wish to classify the pay term on the basis of days. By default, the system displays “Days Based”.
Frequency	Use the drop-down list box to specify the frequency at which the payment is made to the supplier. The system displays the option “Months” which indicates that the payment is done monthly. Ensure that this field is set to “Months”, if the “Pay Term Classification” is set to “Date Based”. The system leaves this field blank by default, if the “Pay Term Classification” is set to “Days Based”.
Proportionate Discount	Use the drop-down list box to specify whether to calculate proportional discount amount for the payment made. The system provides the options, “Yes” and “No”. Select “Yes”, if you wish to calculate the proportional discount amount and “No”, if you do not wish to calculate the proportional discount amount. The system sets the field to "Yes" by default. Refer to the topic “Create Pay Term – A summary of the activity” for more details on calculating proportional discount.
Anchor Date	Use the drop-down list box to select the date based on which the discount date and due date are calculated. The system lists the following options:
	Manual – Indicates that the anchor date must be manually specified.
	Supplier Invoice Date - Indicates the invoice date of the supplier.
	Our Doc. Date - Indicates the anchor date such as purchase order.
	The system displays the “Supplier Invoice Date” by default.

Enter the following fields in the “Pay Term Details” multiline:

Due Day / S

The specified number of days within which the due amount must be paid (Integer). Mandatory. Ensure this is a positive integer.

Note: If the “Pay Term Classification” field is set to “Days Based” and if more than one record is entered for a pay term, ensure the due days are in the ascending order of row numbers, since the source on which these are calculated is the “Anchor Date”. For example, if there are three entries in the multiline and due days for the first row is 15, then the due days for second row must be more than 15 (say 20). The due days for the third row must be more than 20 (say 25).

Due %

The percentage of the transaction amount that must be paid to the supplier (Decimal). Mandatory, if the “Due Days” field is not blank.

Note: Ensure that due percentage is a positive value and the sum of all the due percentages entered for the specified pay term is equal to 100, , if the “Pay Term Classification” field is set to “Days Based".

Discount Days

The number of days, within which the due amount must be paid, to avail the discount offered (Integer). Ensure this is a positive integer and less than the due days entered for the pay term.

Note: If the “Pay Term Classification” field is set to “Days Based” and if there is more than one record in the multline, ensure that the "Discount Days" in the subsequent row is greater than the "Due Days" in the previous row. For example, if first row has "Due Days" as ten, ensure that row two has "Discount Days" as 11 or more.

Discount %	The percentage of discount offered by the supplier for payment within the discount days (Decimal). Discount percentage is specified as a percentage of the Due Percentage. Ensure this is a positive value and less than or equal to 100.
Penalty %	The penalty to be paid per annum on payments made after the due date (Decimal). The penalty amount is computed based on the percentage of due amount and the number of days the payment has been delayed, with respect to the due date. Ensure this is a positive value.

Click the "Create Pay Term" pushbutton at the bottom of the page, to create the payment terms.

Note: The system creates the pay term and sets the status as “Active”. The system stores the login user name and the current server date as the created date.

If the “Pay Term Classification” field is set to “Date Based”, on creating the pay term the system ensures that:

only one record is entered in the multiline.
the value entered in the “Due Day / S” field is less than 31, and the value entered in the “Due %” field is equal to 100.

Prerequisite

“Create Common Category“ activity of the “Logistics Common Master” business component.

What you can do in this page

Set the parameter to calculate proportional discount

Create pay term of different types

Create pay term of different categories

Set the parameter to calculate proportional discount

You can set the “Proportionate Discount” parameter to “Yes” to calculate discount for each installment paid before discount days and penalty on installments paid after the due days. You can set the “Proportionate Discount” parameter to “No” to calculate discount or penalty on due percentage only after the entire due amount is paid.

Set the “Proportionate Discount” field to “Yes”, to calculate discount or penalty for each installment paid to the supplier.
Set the “Proportionate Discount” field to “No”, to calculate discount or penalty only after the entire due percentage is paid.

Create pay term of different types

You can create pay term of two different types by classifying them as “Advance” or “Net”.

Set the “Pay Term Type ” field to “Advance”, to create a pay term of the “Advance” type.
Set the “Pay Term Type” field to “Net”, to create a pay term of the “Net” type.

Create pay term of different categories

Based on the quick codes defined in the “Create Common Category” activity of the “Logistics Common Master”, you create pay term of different categories.

Set the appropriate option in the “Pay Term Category” field, to create pay terms of different categories.