Payment Term
Overview
Below is a business-focused explanation of the Payment Term document type, written for practical use in Dafater.
What the Payment Term Is Used For
Payment Term defines when and how customers or suppliers are expected to make payments. It sets clear rules for payment timing—such as immediate payment, payment after a certain number of days, or split payments over multiple dates.
By using Payment Term, businesses can:
- Standardize credit conditions with customers and suppliers
- Improve cash flow planning
- Reduce disputes related to payment expectations
- Ensure consistency across invoices, sales, and purchase documents
In simple terms, Payment Term answers the question: “When should this amount be paid?”
Prerequisites and Setup Requirements
Before using Payment Term effectively, the following should be in place:
- Defined business policies for customer and supplier credit periods
- Agreement with customers or suppliers on payment expectations
- Basic understanding of how your business manages invoicing and collections
- Clarity on whether payments are single-installment or split across multiple dates
Payment Term should be aligned with your company’s finance and credit control policies.
Typical Workflow and Business Process Fit
Define Payment Terms
The finance team creates different Payment Terms based on business needs (for example, “100% Advance,” “Net 30 Days,” or “50% Advance, 50% After Delivery”).Assign to Customers or Suppliers
Each customer or supplier can be linked to a default Payment Term, ensuring consistency.Apply to Transactions
When sales invoices or purchase invoices are created, the Payment Term automatically determines the due date(s).Track Due Dates and Collections
Payment schedules generated from the Payment Term help teams follow up on outstanding payments on time.
This workflow ensures payment expectations are clear from the moment a transaction is created.
Key Business Scenarios Where Payment Term Is Essential
Credit Sales
When selling goods or services on credit, Payment Term defines how long the customer has to pay.Advance or Partial Payments
For projects or large orders, Payment Term supports advance payments and milestone-based collections.Supplier Payment Planning
Helps manage cash outflow by clearly defining when supplier payments are due.Cash Flow Management
Accurate payment timelines allow better forecasting and financial planning.Customer Relationship Management
Clear payment rules reduce misunderstandings and improve trust with customers.
Important Considerations for Users
- Choose Payment Terms that balance customer flexibility and business cash flow needs
- Ensure Payment Terms are clearly communicated and agreed upon before transactions
- Avoid frequent changes to Payment Terms for the same customer, as it may create confusion
- Review Payment Terms regularly to ensure they still match business strategy
- Use consistent Payment Terms across similar customers or suppliers for easier management
Summary
In Dafater, Payment Term is a critical business document that defines payment timing and conditions. It plays a central role in invoicing, collections, cash flow planning, and maintaining healthy customer and supplier relationships. When set up thoughtfully, it helps businesses get paid on time while maintaining professional and transparent financial operations.
Basic Information
- Module: Accounts
- Document Type: Other
Fields
| Field Name | Label | Type | Required | Options | Description |
|---|---|---|---|---|---|
| paymenttermname | Payment Term Name | Data | - | Unique name identifying this payment term in Dafater | |
| invoice_portion | Invoice Portion (%) | Float | - | Percentage of invoice amount due under this payment term | |
| modeofpayment | Mode of Payment | Link | Mode of Payment | Preferred payment method linked for this term in Dafater | |
| duedatebased_on | Due Date Based On | Select | Day(s) after invoice date, Day(s) after the end... | Rule determining how due date is calculated for invoices | |
| credit_days | Credit Days | Int | - | Number of days allowed before payment becomes due | |
| credit_months | Credit Months | Int | - | Number of months allowed before payment becomes due | |
| discount_type | Discount Type | Select | Percentage, Amount | Defines whether early payment discount is percentage or fixed amount | |
| discount | Discount | Float | - | Discount value applied for early payment within validity period | |
| discountvaliditybased_on | Discount Validity Based On | Select | Day(s) after invoice date, Day(s) after the end... | Basis for calculating discount validity period | |
| discount_validity | Discount Validity | Int | - | Duration discount remains applicable for early payment | |
| description | Description | Small Text | - | Additional details explaining this payment term's business usage |
Permissions
| Role | Read | Write | Create | Delete | Submit | Cancel |
|---|---|---|---|---|---|---|
| System Manager | ✓ | ✓ | ✓ | ✓ | ||
| Accounts User | ✓ | ✓ | ✓ | ✓ | ||
| Accounts Manager | ✓ | ✓ | ✓ | ✓ |
Related DocTypes
| DocType | Relationship | Module |
|---|---|---|
| Mode of Payment | Links to | Accounts |