Rev.

12/01/2009 1

AP Terms Codes and Check Preparation in TRAVERSE V11

AP terms codes define the discount percentage and the number of days in which you must pay
the vendor to receive a discount. There are two different methods of entering Terms Codes, standard
and prox. Once you have entered your terms codes into the system you can assign them to your
vendors as the default to be used for that vendors transactions.
The Standard Terms method is used when a vendor extends you an early pay discount on your
purchases if you pay within a certain number of days of the invoice date. The full invoice amount will be
due if payment is not received on or before the Discount Due Date. Generate a new Terms Code in
Setup and Maintenance, Terms Codes if required. Enter the code you would like to use for the new
Terms Code, refer to Figure A on page 2, and provide a brief description. In the Disc% field enter the
discount percentage offered for early payment. In the Days column, there are Discount and Net Due
fields. The Discount field corresponds to the number of days added to the invoice date to calculate the
Discount Due Date. The Net Due field corresponds to the number of days added to the invoice date to
calculate the Net Due Date. Once you have entered the new Terms Code you can assign it to the Vendor
in the Vendors Account.
Example; You receive an invoice from one of your vendors. The terms for this invoice are for a
discount of 5%/15, Net30 with an invoice date of 1/13/10. In order to take advantage of the 5%
discount, you would pay the invoice on or before 01/28/10 which is 15 days after the invoice date. If
the invoice is not paid by 1/28/10 the total invoice amount will be due on 02/12/10, net 30 days.
The Prox Terms method would be used if you have a vendor who extends you an early pay
discount if you pay an invoice by a specific day of the month, Discount Due Date. If payment is not
received by the Discount Due Date the full invoice amount would be due by a specific day of the month,
Net Due Date. Generate a new Terms Code in Setup and Maintenance, Terms Codes if required. Enter
the code you would like to use for the new Terms Code, refer to Figure A on page 2, and provide a brief
description. In the Disc% field enter the discount percentage offered for early payment. Place a check in
the box for the Day of Month field. This flags the system that the numbers you enter in the Discount
and Net Due fields correspond to specific days of the month. The Discount field corresponds to the day
of the month that the invoice must be paid in order to take the discount, Discount Due Date. The Net
Due field corresponds to the day of the month that refers to the Net Due Date. The Minimum Days field
is used to determine if the Invoice Date is within (x) days of the Discount Due Date, if it is, the Discount
Due Date will be extended to the next month on the day of the month entered in the Discount field. The
Net Due Date will also be extended to the next month on the day of the month entered in the Net Due
field. Once you have entered the new Terms Code you can assign it to the Vendor in the Vendors
Account.

Rev. 12/01/2009 2

Example 1; you receive an invoice from one of your vendors. The terms for this invoice are a
discount of 5%/5
th
/30
th
with an invoice date of 04/24/10 and Minimum days equal to 10. Traverse
looks at the invoice date 04/24/10, and the day entered in the Discount field 5, to determine the
discount due date 05/05/10. It then subtracts the Minimum days 10, from the discount due date for a
calculated date of 04/25/10. It then compares this calculated date to the invoice date 04/24/10. If the
invoice date 04/24/10, is less than or equal to the calculated date 04/25/10, the invoice will have a
discount due date of 05/05/10 and a net due date of 05/30/10. If the invoice date is 04/26/10, which
is greater than the calculated date 04/25/10, the discount due date will be extended out to the next
months discount day, 06/05/10 and the net due date will become 06/30/10. In this example we
selected a Terms Code which allows a discount if paid on or before the 5
th
of the month. If the invoice
is not paid on or before the 5
th
the discount is forfeited and the total invoice amount is due on the
30
th
.
Example 2; you do not have an early pay discount and want to have all invoices due on day 10
of the next month. Create a new Terms Code where the Disc% is 0.00, the Discount and Net Due fields
under the Days column are both 10. Place a check in the Day of the Month box and enter 10 in the
Minimum Days field. If the invoice date falls between the 1
st
and the 10
th
of the month the invoice
will be due on the 10
th
day of the next month.

Figure A.
In Business Rules you can select, additional items to have included in the Accounts Payable
discount calculation.
Select Yes to calculate discounts on sales tax; otherwise, select No. If you have your Terms Codes set up
to give discounts for early payments, you can include the sales tax in the total for calculating the
discount.
Select Yes to calculate discounts on freight; otherwise, select No. If you have your Terms Codes set up
to give discounts for early payments, you can include the freight total in the total for calculating the
discount.
Select Yes to calculate discounts on miscellaneous charges; otherwise, select No. If you have your
Terms Codes set up to give discounts for early payments, you can include the miscellaneous charges in
the total for calculating the discount.
Rev. 12/01/2009 3



Preparing Payments
In order to be selected for payment and eligible for a discount, the Invoices Due date entered in
the selection criteria must be equal to or greater than the discount due date of the invoice AND the
Discounts Due date, entered in the selection criteria, be less than or equal to the discount due date of
the invoice. Once the Discounts Due date becomes greater than the discount due date of the invoice,
the discount is forfeited and the invoice is not selected again for payment until the net due date of the
invoice is equal to or greater than the Invoices Due date.


Example; Invoice Date = 12/01/09, Discount Due Date = 01/05/10, Net Due Date = 01/30/10.
Invoice will be selected as the Invoices Due date entered is equal to or greater than the discount
due date of the invoice and the Discounts Due date entered is less than or equal to the discount due
date of the invoice.
Rev. 12/01/2009 4


Invoice Date = 12/01/09, Discount Due Date = 01/05/10, Net Due Date = 01/30/10
Invoice will not be selected as the Discounts Due date entered is greater than the discount due
date of the invoice. The discount is forfeited and the invoice will not be selected for payment until the
Invoices Due date is equal to or greater than the net due date of the invoice.

Rev. 12/01/2009 5


Invoice Date = 12/01/09, Discount Due Date = 01/05/10, Net Due Date = 01/30/10
Invoice will be selected for payment and discount has been forfeited because the Invoices Due
date is equal to or greater than the net due date of the invoice and the Discounts Due date is greater
than the discount due date of the invoice.