Term

What is Payment term and due date?

The payment term is the agreement on when an invoice must be paid, for example thirty days from the invoice date. The due date is that agreement applied to the invoice date, and should be derived rather than copied off the document.

Also known as: payment period, due date, early payment discount

Almost every supplier prints its own term on the invoice. That is their wish, not necessarily your agreement. If your administration holds a thirty day payment term for this supplier, that is what counts, even when the paper says fourteen. A system that copies the due date off the document lets the supplier set your payment calendar.

So the rule is simple: invoice date plus payment term is the due date. You read the invoice date from the document, because it is a fact. The term comes from the supplier record, because it is an agreement. If the term on the invoice differs sharply from the agreement, that is not an error but a signal somebody should see.

In Exact Online

In Exact Online the payment term sits on the supplier record and sets the due date of the purchase entry. Glimps derives the due date from the invoice date plus the payment term in Exact Online, and does not copy it from what is printed on the invoice. The invoice date itself is normalised to one unambiguous format, because suppliers write the same day in ten different ways.

Why this touches more money than it looks

A due date set too early means you pay sooner than needed and give away working capital. A due date set too late means reminders, lost early payment discount and sometimes a delivery hold. At a few thousand invoices a year, a systematic ten day shift stops being an administrative detail.

Early payment discount, and when it is worth it

An arrangement such as two percent discount when paying within ten days, otherwise thirty days net, sounds small but is a substantial annualised return on your money. The condition is that the invoice is approved and posted inside those ten days. That is usually where the discount is lost: not because the money was missing, but because the invoice was still waiting on an approval somewhere.

Where it usually goes wrong

  • 1Copying the due date off the document. The supplier then sets your payment behaviour.
  • 2Not maintaining payment terms on the supplier record, which turns every invoice into an assumption.
  • 3Reading dates in the wrong format. A foreign invoice with 03/04 can mean March or April.
  • 4Agreeing an early payment discount but never measuring it. What is not measured is not captured.
FAQ

Frequently asked questions

Common questions about Payment term and due date.

Questions about your situation?

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The agreed term in your administration leads. What the supplier prints is their proposal. If it structurally differs, that is a conversation with the supplier, not a reason to deviate per invoice.

Then the system falls back on a default, which is exactly where errors come from. It is worth finding the suppliers without a term once and filling them in; that is almost always a short list with a lot of effect.

That depends on what you agreed. From the invoice date is most common. From the date of receipt is more favourable to you and occurs with suppliers that invoice late. Whichever you pick, record it on the supplier so it does not become a per-invoice discussion.