Payment terms define the agreed conditions for when and how an invoice must be paid. They are created at the organization level and then assigned to individual partners — so you define your standard terms once and reuse them across your entire partner directory.
What Payment Terms Define
| Field | Definition |
|---|---|
| Name | A human-readable label that describes the terms (e.g., “Net 30”, “2/10 Net 30”, “Due on Receipt”). |
| Code | A short system identifier (e.g., NET30, DOR). Used in references and reports. |
| Days | The number of days from the invoice date until payment is due. |
| Discount percent | An early payment discount, expressed as a percentage (optional). |
| Discount days | The number of days within which the early payment discount is available (optional). |
| Description | A detailed plain-language explanation of the terms (optional). Useful for teams who are not familiar with payment term codes. |
When both discount percent and discount days are set, it creates an early payment incentive: “pay within X days for a Y% discount, or pay the full amount by the due date.” When neither is set, it is a straightforward net-days arrangement.
Common Payment Terms
Here are typical terms you might define for your organization:
| Term | Code | Days | Discount | Meaning |
|---|---|---|---|---|
| Net 30 | NET30 |
30 | — | Full payment due within 30 days of the invoice date. The most common standard term. |
| Net 60 | NET60 |
60 | — | Full payment due within 60 days. Common for larger orders or long-standing relationships. |
| 2/10 Net 30 | 2-10-30 |
30 | 2% within 10 days | Pay within 10 days and get a 2% discount. Otherwise, the full amount is due in 30 days. |
| Due on Receipt | DOR |
0 | — | Payment is due immediately when the invoice is received. Common for small or one-time transactions. |
| Prepaid | PREPAID |
0 | — | Full payment required before goods are shipped. Used for new partners or high-risk transactions. |
| Net 90 | NET90 |
90 | — | Extended payment window of 90 days. Sometimes used for government contracts or seasonal businesses. |
Using Payment Terms with Partners
Each partner can have separate payment terms for their supplier and client roles:
- Supplier payment terms — the conditions under which you pay the supplier for goods you purchase. For example, your metal supplier might give you Net 60 terms.
- Customer payment terms — the conditions under which the customer pays you for goods you sell. For example, a retail customer might be on Due on Receipt while a corporate customer has Net 30.
A partner who is both a supplier and a client can have different terms for each side of the relationship. This is common — the terms you negotiate as a buyer are often different from the terms you offer as a seller.
When payment terms are assigned to a partner, they serve as the default for new transactions with that partner. This pre-fills the terms on new documents, saving time and ensuring consistency.
The Payment Terms list narrows on its filter button by Active or a Days, Discount % or Discount Days band — “terms over 60 days” is the credit-policy question (Working with lists).
Setting Up Payment Terms
- Go to Business Partners > Payment Terms and click New.
- Fill in the name, code, days, and optionally the discount fields.
- Add a description if the terms might be unclear to other team members.
- Save.
Best Practices for Setup
- Define your standard set during initial setup — create all the payment terms your organization commonly uses before you start adding partners. This way, the terms are ready to assign immediately.
- Keep the list manageable — most organizations use 4-8 standard terms. Having too many creates confusion and makes it harder to enforce consistent policies.
- Use clear, standard names — “Net 30” and “2/10 Net 30” are universally understood in business. Avoid inventing non-standard names that your team would need to learn.
- Deactivate rather than delete — when a payment term is no longer used, deactivate it instead of deleting it: open the term and use Deactivate under More actions (the three dots). Existing partners and historical documents still reference it, and deleting would break those references.