Terms of Payment

Terms of Payment are conditions agreed between business partners for the payment of invoices. The
conditions define the due date and the cash discount offered for payment of the invoice within a certain
period.

Terms of payment enable the system to calculate a cash discount and invoice due date.

How to create terms of payment in SAP

Path:- SPRO >Display IMG > Financial Accounting (New) > Accounts Receivable & Accounts Payable >
Business Transactions > Incoming Invoices/ Credit Memos > Maintain Terms of Payment (OBB8)

Execute and Go to New Entries

1. Payt Terms : – Update the four digits key that identifies as terms of payment in SAP – NEXT

2. Sales Text : – Update the description name of payment terms as Payment Term for 30 Days.

3. Account Type : – Choose the account type that the payment term is applicable for. If this payment term

if for vendor accounts choose vendor option or for customer accounts choose customer option. Choose

both account type to use this payment terms for both customer and vendor accounts.

4. Default for baseline data : – Choose the baseline date based on the requirements and the possible

entries are No default, posting date, document date and entry date.

5. Payment Terms : – Update the details of percentage, No.of days.

6. Explanation : – After you update the payment terms, the system automatically generates details

information terms of payment.

After fill all the details save it.

How to define accounts for cash discount taken in SAP

Define the G/L account numbers for your cash discount received accounts. The SAP system posts the
cash discount amount to this G/L account when you are clearing the open items. Discounts are to be
adjusted to purchases where a cash discounts are too shown under other income.

Note:- First we go to FS00 and create Cash Discount Taken A/c and Cash Discount Granted A/c in
Indirect Incomes and Indirect Expenses.
Path:- SPRO > SAP Reference IMG > Financial Accounting (New) > Accounts Receivable and Accounts
Payable > Business transactions > Outgoing payments > Outgoing payment global settings > Define
accounts for cash discount taken (OBXU)

Execute it.

A window opens for entering the chart of accounts key, update the chart of account and press enter.
On configuration accounting maintain: accounting posts -rules, click on accounts key for assignment of
G/L accounts for cash discounts.
Under Account assignment option, update the cash discount received G/L in the field account as shown
below image.
After assignment of general ledger cash discount received accounts, click on save button and save the

configured details.

Successfully we have defined accounts for cash discounts taken in SAP Financial Accounting.

Path:- SPRO > SAP Reference IMG > Financial Accounting (New) > Accounts Receivable and Accounts
Payable > Business transactions > Incoming payments > Incoming payment global settings > Define
accounts for cash discount granted (OBXI)
Execute it.

A window opens for entering the chart of accounts key, update the chart of account and press enter.
On configuration accounting maintain: accounting posts -rules, click on accounts key for assignment of
G/L accounts for cash discounts granted.
Under Account assignment option, update the cash discount received G/L in the field account as shown
below image.
After assignment of general ledger cash discount received accounts, click on save button and save the

configured details.

Successfully we have defined accounts for cash discounts taken in SAP Financial Accounting.
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