Payment terms communicate to your customer the deadline by which they are supposed to pay your invoice. You can also use payment terms to provide customers an incentive to pay your invoice early by using early payment discount terms. In this guide we will walk you through how to set up and use payment terms.
- Go to Settings → Payment Terms.
- Click New.
- Enter in the details of your payment terms, including the name of your terms, due in days, and any early payment discount.
- Click Create to save your payment terms.
In the payment term settings, you can assign one payment term to be the default payment terms. New customers and invoices will have the default payment terms already selected. You are not required to nominate one of your payment terms as the default.
Payment terms can be assigned to a customer account. When creating or editing a customer you can enter in the payment terms. AutoPay must be disabled for the customer. New invoices issued for that customer will have the customer's payment terms selected. This will supersede any payment terms selected to be the global default.
When creating an invoice through the user interface you can select one of your payment terms from the payment terms dropdown. The payment terms dropdown is only available until after a customer is selected. The payment terms you select will automatically calculate a due date and apply the early payment discount if applicable. AutoPay must be disabled for the invoice in order to select payment terms.
When modifying payment terms, the modification will only apply going forward when using the modified payment term. Modifying existing payment terms does not retroactively change the due date or early discounts of any invoice where the payment terms were previously used. If you need to apply the new payment term settings then you can modify the invoice and re-assign the payment terms.
Early payment discounts provide your customer with a monetary incentive to pay an invoice by a certain number of days before it is due. For example, a common early payment discount that businesses offer is a 1% discount if a customer pays within 10 days. Early payment discounts can be useful for businesses that benefit from faster cash flow, or to reduce the risk of not being paid on a large invoice amount.
- Create a new set of payment terms or modify an existing payment term.
- Enable the Has Discounts setting on the payment terms.
- Enter in a % or monetary amount of the discount.
- Put in the number of days after the invoice date after which the discount expires.
You can now use your early payment discount terms on a customer or invoice. The early payment discount terms are assigned in the same way as regular payment terms. When early payment discount terms are applied to an invoice through the user interface, the payment terms will automatically add an expiring discount.