Payment Terms in Oracle Payables

Learn how to create payment terms, apply discounts and manage installments in Oracle Fusion Payables

Today I will discuss how to create Payment Terms in Oracle Payables Application. We will also cover the steps for applying discount and how you can enter installments with a different discount rate.

So what is a Payment Term? Payment terms are used to automatically create invoice installments. You can define payment terms to create multiple installments and multiple levels of discounts.

Payment Term Setup

Navigate to Setup and Maintenance from Global Header:

Choose Setup: Financials and search for task ‘Manage Payment Terms’:

Click on ‘+’ button to create a new payment term:

Enter Payment term name, description and indicate start date:

Next, you need to define in which installments you are going to pay the supplier. You can create installment with 100% which means you need to pay the full amount at once in this installment. Or you can separate installments by 50 percent. In this case, you will create two installments with 50%. You can define different discounts for each installment.

In my example below, I am creating 1 installment with 100% and I am defining the days as 30. This means I need to pay the full 100% amount within 30 days.

Next, I am applying a discount to my installment. As you see below, I am defining the discount as 10% and days 5. It means I will get a 10% discount if I pay within 5 days and the whole amount I need to pay within 30 days.

We can create a Second Discount by defining a discount percent and day of the month as you see below. This means if I pay within 5 days I will get a 10% discount, but if I pay after 5 days, I am getting a 5% discount and I need to make this payment before the 15th of the month if I want to receive 5% discount.

The last thing you need to do is to create a Site Assignment. If you do not create it, then you will not be able to use the Payment Term you have created under Business Unit which you desire.

Payment terms are enabled for reference data sharing using the method of assignment to multiple sets, no common values allowed. The predefined reference group is called Payables Payment Terms and the determinant type for the reference group is business unit. Before you can use a payment term, you must assign the payment term to a reference data set.

Save and Close your work. You can now use the Payment Terms you have created in your transactions.

That is it, guys:) Hope you are clear with the topic. If not, please do not hesitate to reach me.

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I am an Oracle Functional Specialist with more than 6 years of experience. I help clients to understand software capabilities and to analyze business needs. My main goal is to recommend solutions and ultimately guide through all phases of Oracle Cloud Applications. I am also inspired to write about life, improvement and personal growth.

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