Payment Terms in ERPNext
A Payment Term defines how and when a payment is split and scheduled within a transaction.
It helps businesses structure payments like advance, partial, and milestone-based collections.
Where It is Used
Payment Terms can be applied in:
- Sales Invoice
- Purchase Invoice
- Sales Order
- Purchase Order
- Quotation
How Payment Terms Work
- Each Payment Term defines a portion of the total invoice amount.
- ERPNext automatically calculates due dates and payment schedules.
- All related General Ledger entries are posted accordingly.
Creating a Payment Term
- Go to Payment Term list and click New.
- Enter a name (e.g., 50% Post Shipment).
- Define Invoice Portion (e.g., 50%).
- Select Due Date rule.
- Set Credit Days if applicable.
- Save.
Invoice Portion defines how much % of total amount this term covers.
Due Date Options
- Days after invoice date – due date based on posting date.
- Days after end of invoice month – calculated from month end.
- Months after end of invoice month – extended credit cycle.
Early Payment Discount
- Discount can be set as Percentage or Fixed Amount.
- Applied only if payment is made within valid period.
- Automatically applied during Payment Entry from invoice.
Discount is not applied for bulk or independent Payment Entries.
Payment Schedule in Documents
- Payment Terms generate a structured payment schedule in invoices.
- Each installment gets its own due date.
- Helps manage milestone-based billing easily.
Key Benefit
Payment Terms help automate structured billing, reduce manual tracking, and improve cash flow planning in ERPNext.
