## 38.2 Payment Terms

The payment terms file should contain all the payment terms offered by the vendors in the system. Each payment term is identified with a code such as **2/10, n/30, or n/20** and is described by the information in the **Description **field. The other fields in the payment terms record define the discount percent, number of days in the discount period, and the number of days in the pay period.

Payment terms are entered into the payment terms file by selecting **Payment Terms, **from the **Select**, **Accounts Payable** menu. The Payment Terms screen is shown below.

If there is no discount offered, the** Discount Percent** and **Discount Period in Days** fields may be left blank.

The **Payment Terms Code **field is displayed on the vendor master screen, the purchase order header screens, and the voucher header screen, and is validated against the payment terms file. In other words, you cannot enter a payment terms code anywhere in the system unless it has first been entered into the payment terms file.

The system uses the information in the payment terms file to calculate the discount amount, discount date, and pay date on a voucher. For example, an invoice is received for $100.00 on January 1, 1987. A voucher is created with payment terms **2/10, n/30. January 1, 1987 **is used as the vendors reference date. The screen above shows that the payment period in days for payment terms **2/10, n/30** is **30**. The system calculates the pay date for the voucher by adding the payment period in days, **30**, to the vendors reference date, **January 1, 1987,** to get a pay date of **January 31, 1987**.

The discount percent for pay terms **2/10, n/30** is **2 **(2%). The discount amount for the voucher is calculated by multiplying the discount percent, 2%, by the voucher amount, $100, and then dividing by 100 (for percentages) to get $2.00.

The discount date for the voucher is calculated by adding the discount period in days, **10**, to the vendors reference date, **January 1, 1987**, to get **January 11, 1987.
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