This article will provide complete details to Configure Terms of Payment.
- Transaction Code ( TCode ): OBB8
- IMG Path: SPRO > IMG Screen > Financial Accounting > Accounts Receivable and Accounts Payable > Business Transaction > Incoming Invoice/Credit Memos > Maintain Terms of Payment
Click “New Entries” button to define a new Payment Terms.
What is Payment Terms/ Terms of Payment in SAP?
Payment terms, in SAP S/4HANA, determines the conditions of invoice payment like Baseline Date and Discounts, between Business Partners and Organization.
It calculated the invoice due date as per the baseline date, and discount based on certain conditions maintained in Terms of payment.
Payment Terms is assigned at Business Partner Master Data level. And it’s automatically selected during invoice posting for that particular Business Partner. However, Payment Terms can be updated manually for an invoice(based on business requirement) during invoice posting.
- For FI invoices (i.e. invoices posted via TCode: FB60 or FB70) payment terms is defaulted from for Business Partner Master Data.
- For Purchasing invoices payment term is defaulted from “Purchasing View” in Purchase Order / MIRO Invoices.
- and , for Customer Invoices from SD side the payment is defaulted from “Sales Data” view.
To know where exactly do we maintain the Payment Terms in Business Partner Master data, please check the link Where Payment Terms is assigned in Business Partner Master Data?
Note: There is no change in Payment Terms functionality in S/4HANA.
Payment Terms and Sales Text:
1. Payment Terms is represented by a 4-character key, which is later assigned to Business Partner Masters.
2. Sales Text is the short description of the Payment Terms. This field should be used if you are using the payment terms for Customer Account, else you will get an error message.
3. Day Limit represents the date of a month up to which the Payment Terms is valid. SAP allows creation of multiple Terms-of-Payment with same Payment Term Key/Code, but with different Day Limit.
Example 1: If following Payment Terms are created in a system:
- Payment Term : TST1, Day Limit: 20, Discount: 10%, Default for Baseline Date: Posting Date.
- Payment Term: TST1, Day Limit: 31, Discount: 5%, Default for Baseline Date: Posting Date.
(Note: Both the Payment terms have same Key but different Day Limit).
Then, Invoices posted with posting date between 1st to 2oth of a month will have a discount of 10%. And invoices posted with Posting Date after 20th will have discount of 5%.
Example 2: Scenario showing how “Day Limit” is depends on value set at “Default for Baseline Date“.
Lets say we have updated the “Default for Baseline Date” to “Entry Date”. And the Day Limit and Discount remains the same.
And then we post a document on 02-July, with Posting date 22-July and Invoice Date 22-July. In this case, the Posting Term TST1 with Day limit 20 will be selected and a discount of 10% will be applied.
4. Own Explanation This field is used to give own explanation to the payment terms. But be careful with this field, as entering details in this field will overwrite the automatic generated explanation by system based on discount percentage and days, in box 10 of the screen shot shown above.
If this field is left blank, then system will generate description in box 10 of the screen shot shown above.
5. Account Type: Define whether the payment terms are valid for customers or vendors, or both.
- Vendor: Select this checkbox if this payment is to be used only for vendors.
- Customer: Select this checkbox if this payment is to be used only for customers.
- Vendor and Customer: Select both the checkbox if the payment terms is to be used for both customer and vendor.
Baseline Date Calculation
6. Baseline Data Calculation is used to set the baseline date to some fixed date of current month or some fixed date of future month.
- Fixed Day: Calendar Day which will overwrite the day value of baseline date. So, if this field is set to 2, then the base line date will always be 2nd day of the month irrespective of what is set in Default For Baseline Date(Box 8).
- Additional Months: This field defines the no of month(s) to be added to the baseline month.
Part 1 of the requirement : Invoices dated between 1st to 16th, should be due on the 5th of the 2nd month and have a 1% discount. So an invoice dated ‘12-May’ would be due ‘5-July
For such a requirement we have to set the payment term as below:
Part 2 of the requirement: Invoices dated between 17th to 31st should be due on the 5th of the 3rd month and have a 1% discount. So an invoice dated ‘18-May’ should be due on ‘5-Aug’.
For such a requirement we have to set the payment term as below:
Pmnt block/pmnt method defaults
- Block Key: Value set in this field will blocked the invoice automatically. The block key will flow from Payment Terms to the Invoice.
- Payment Method: Value set in this field will automatically populate the invoice.
Default For Baseline Date
8. Default for the baseline date: The baseline date is the date from which the due date for the payment is calculated based on the criteria defined in the baseline date calculation box(box 6). The baseline date can be set to:
- No Default: Which means you have to enter the base date manually during invoice entry.
- Posting Date: Which means the baseline date will be defined from Posting Date.
- Document Date: Which means the baseline date will be defined from Document Date/ Invoice Date.
- Entry Date: Which means the baseline date will be defined from the entry date.
Value set here has a direct impact on “Day Limit” value.
Value set in box 6(Baseline Date Calculation), overwrite the baseline calculation process from this value. Which means between “Default For Baseline Date” and “Baseline Date Calculation”, the higher priority id given to ” Baseline Date Calculation ” for deciding the baseline date.
- Installment Payments
- Rec. Entries: Supplement fm Master
Terms/Percentage/No-of-Dats —– Fixed Dat/Additional Months
Here we define the discounts which will be given if the payment is made within a certain number of days from the baseline date. Mostly businesses will offer a discount if the payment is made fast.
- In the payment term definition shown below, a 3% discount is offered if the payment is made with in 14 days from the baseline date.
- And a 2% discount is offered if the payment is made within 20 days from the baseline date, and
- the full amount is due after 30 days from the baseline date.
- Auto populate entries
- Hide Entry in Input Help
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