payment terms

[Former Member]

Hi all

What is the practical significance of the payment terms? I mean what haapens practically, if a customer does not pay as per his payment term?

Say a customer's payment terms is that he should pay all the money for this order within 30 days. Wat happens if he does not pay within 30? It must impact on the sales order right? how?

-Prashant

[Former Member · Accepted solution]

Hi ,

There is not much of practical significance of payment terms in controlling the sales process of a customer ,its more or less like an info to the Finance people that in case an order is processed till billing and the payment terms is given as 30 days ,in FBL5N the customer account shows as open till 30 days after which if the payment is not made the status is shown as due ,but still there is no control for this, thats the reason we go to CREDIT MANAGE MENT for having control at various levels, Hope this would solve your query.

Regards

vinod charles

[Former Member]

Thank u all.... guys.

Due to technical prob, I am not able to assign points. Will do soon.

Happy Diwali

Warm regards,

Prashant

[Former Member]

Payment terms are used to give FI credit or debit memo at the time of knocking off.

Suppose payment term is 2 % - 30 Days, and 1 % - 45 Days.

Then if the customer pays within 30 days 2 % discount is given and if after 30 days but within 45 days then 1 % and after (say) 60 days interest can be debited to the customer at the time of knocking off.

[Former Member]

Hi Prashant,

Terms of Payment is an agreement with the customer on how shoud the payments be made for the billing documents created. What is the duration he can taken before being charged with an interest rate etc are specified in this agreement.

The path to define the terms of paymnet is given below

SPRO -> Sales & Dist -> Master Data -> Business Partners -> Customers -> Billing Documents -> Define Terms of Payment.

Incase the customer does not pay within 30days depending upon the company's policy and the agreement with the customer he could be charged an interest at a particular rate or can be denied from booking further orders.

Hope it had helped. Do reward if you had felt the same

[Former Member]

hi

The payment terms are set between the org and the customer. Once the billing is done then he follows the payment terms but if he does not then the dunning procedure is used where we specify how and when to remind the customer about the payment he has missed..... you will find the dunning procedure field in the customer master.

Hope it solves your query