Payment Terms
When you sell something on credit, you give the customer time to pay — "due in 30 days," perhaps with "a small discount if you pay early." Those arrangements are payment terms, and in REDA you define them once and attach them to a customer or vendor. From then on, every invoice automatically gets the right due date, and when you pay vendors early the discount is worked out and posted for you. This article explains the idea from scratch, then shows exactly what REDA computes and posts.
Access you'll need. Creating and editing Payment Terms requires the Accounting Admin v2 or Accounting Controller v2 permission set. The Accounts Payable v2, Accounts Receivable v2, and Read Only v2 sets can see the terms and use them on documents, but not change the definitions.
Reading "2/10 Net 30"
Payment terms are often written in a shorthand that looks cryptic until you know the pattern. The classic example is 2/10 Net 30, and it packs three numbers:
| Part | Means | In REDA |
|---|---|---|
| Net 30 | The full amount is due 30 days after the invoice date. | Net Days = 30 |
| 2 / … | A 2% discount is offered… | Discount Percent = 2 |
| … / 10 | …if you pay within 10 days. | Discount Days = 10 |
So "2/10 Net 30" means: pay within 10 days and take 2% off; otherwise the full amount is due in 30 days. A simpler "Net 30" has no discount — just a due date.
The fields on a Payment Term
You build each term once as a reusable record:
| Field | What it sets |
|---|---|
| Net Days | Days from the invoice date until payment is due. Drives the Due Date on Sales and Purchase Invoices. |
| Discount Percent | The early-payment discount available (e.g. 2%). Leave at 0 for no discount. |
| Discount Days | The window for that discount — pay on or before Invoice Date + Discount Days to earn it. |
| Active | Controls whether the term appears in lookups. Deactivate to retire a term while keeping it on past records. |
Payment Term’s shipped page layout carries six fields — Name, Net Days, Currency, and three system audit fields. Discount Percent, Discount Days and Active exist on the object but are not on the layout. As delivered you can therefore enter Net 30 and nothing else: the early-payment discount has nowhere to go, and a term cannot be retired from its own record.
An administrator has to add the three fields to the layout first — Setup → Object Manager → Payment Term → Page Layouts. Verified against refin 1.610.0.
| Common term | Net Days | Discount % | Discount Days |
|---|---|---|---|
| Net 7 (near-immediate) | 7 | 0 | 0 |
| Net 30 | 30 | 0 | 0 |
| 2/10 Net 30 | 30 | 2 | 10 |
| Net 60 | 60 | 0 | 0 |
Three guard rails keep terms sensible — you'll see these exact messages if a term breaks them:
| The message | Why |
|---|---|
| "Net Days must be greater than zero." | Every term gives at least one day — there is no "0-day" term. For payment due immediately, use Net 1. |
| "Discount Days and Discount Percent must both be provided together. Set both values or leave both blank." | A discount needs both a size and a window; one without the other is meaningless. |
| "Discount Days must be less than Net Days. The discount window cannot equal or exceed the full payment period." | "2/30 Net 30" would make the discount permanent — the window must close before the due date. |
How the due date is set
Each customer and vendor has a Default Payment Term. When you raise an invoice for them, REDA copies that term onto the invoice and calculates the due date with simple arithmetic:
When an invoice is saved with the Due Date blank, REDA works down a three-step chain: the invoice's own Payment Term first, then the account's Default Payment Term, and if neither exists it assumes 30 days. A due date you enter by hand always wins — the chain only runs for a blank field.
The early-payment discount — and what it posts
The discount only matters when the bill is actually paid early — and the automation lives on the purchase side, where you decide when to pay. When you pay vendors through the Payment Run (or apply a payment to an invoice by hand), REDA checks each invoice's term:
- Is it still in the window? An invoice qualifies when the days between its invoice date and the payment run date are within the term's Discount Days — and the term actually offers a discount.
- How much? REDA suggests Balance Due × Discount Percent, rounded to 2 decimals — on a part-paid invoice the discount is figured on what's still owed, not the original total.
- You stay in control. The suggestion is shown for review; you can take it, change it, or decline it before the payment is created.
What taking the discount posts
You owe a vendor £600 on 2/10 Net 30 and pay within 10 days, taking 2% (£12) — so you send £588.
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | 600 | |
| Bank | 588 | |
| Purchase Discount (income / cost reduction) | 12 |
The payable clears in full; the £12 you saved is recorded in the entity's Purchase Discount account. The full mechanics — including recording the discount when applying a single payment — are in Settlement Discounts.
And when your customer pays you early?
On the sales side the term still does its main job — the due date and the printed terms the customer sees — but REDA doesn't deduct the discount for you, because it's the customer who decides to take it. If a customer pays £980 against a £1,000 invoice under 2/10 Net 30, record the £980 receipt and clear the remaining £20 with a small credit memo so the invoice doesn't linger as a phantom balance.
Setting one up
Create the term
New Payment Term → give it a clear name ("2/10 Net 30"), set Net Days, and Discount Percent + Discount Days if it offers an early-pay discount.
Attach it to accounts
Set it as the Default Payment Term on each customer or vendor that uses it — see Setting Up a Customer / a Vendor.
That's it
Every new invoice for those accounts now gets the right due date automatically, and vendor payments made inside the window get their discount suggested and posted for you.
Where to go next
- Setting Up a Customer — apply terms to a customer.
- Setting Up a Vendor — apply terms to a vendor.
- Customer & Vendor Accounts — how accounts fit together.
- Creating a Sales Invoice — where terms set the due date.
Frequently asked questions
Yes — that's most terms. Set Discount Percent and Discount Days to 0 (e.g. "Net 30"). It just sets the due date.
The account's Default Payment Term is only the starting point — you can change the term (and the due date) on an individual invoice when you need to.
Early-payment discounts you take post to the entity's Purchase Discount account, configured on the entity's default accounts. (The entity's Sales Discount account serves a different purpose — it takes line-level discounts you print on sales invoices.)
You never compute the figure or pick the account by hand — when a vendor payment falls inside the discount window, REDA works out the suggested discount and posts it to the right account. You just confirm (or adjust) the suggestion before the payment is created.
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