What are payment terms ?

Payment Terms are generally configured by the SAP FICO consultants. However, you are required to understand what they are and their significance when it comes to A/R. As part of our SAP SD Credit Management class, we have discussed A/R, open items etc and as part of the SAP Sales Order Deep Dive, we have discussed payment terms in great detail. Here are some of the variations to payment terms related questions.

  • What are payment terms or Terms of payment ?
  • How are payment terms determined at the sales order level ?
  • Payment terms are available at both the Company code data level and Sales level in SAP Customer Master. Which one will take precedence over the other when the payment terms are determined at the order level ?
  • I want to dynamically determine the payment terms based on the material or customer group. How do I do it ?
  • Can the payment terms be different per line item ?
  • What are the effects of having different payment terms at the line item level ?
  • What is SAP invoice splitting ? What are the some of the parameters that you have seen that resulted in invoice split ?
  • Can you give some examples of payment terms used in your most recent project ?

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2 thoughts on “What are payment terms ?

  1. Krishna says:

    Payment terms are nothing but the mode by which the customer makes the payment to the company.. For example, If the Customer made a purchase of 2000 rupees and the mode of payment selected is 0001 in Customer master (or in Sales order) then the customer will pay the entire due in single payment. To encourage customer for prompt payment, most of the companies will give rebates on the due amt..

    Payment terms can be changed manually in the sales order. and the manual entry wil be given the priority over the customer master.

    If we have not maintained payment terms in the Customer master, then the payment terms maintained in the header level of the Sales order will be applicable for the entire sales order

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  2. Krishna Mohan says:

    1. How are payment terms determined at the sales order level ?
    Ans. PT will be determined from CMR-> Sales area if we’ve not maintained here, then we need to enter manually in the sales order. but it’ll not be picked from CCode data.

    2. Payment terms are available at both the Company code data level and Sales level in SAP Customer Master. Which one will take precedence over the other when the payment terms are determined at the order level ?
    Ans. It’ll be picked from Sales area lever only but not from CCode.

    3. I want to dynamically determine the payment terms based on the material or customer group. How do I do it ?
    Can the payment terms be different per line item ?
    Ans. Am not sure abt the first question (Based on material or Customer group). But we have to maintain PT at CMR level and Cust group will be maintained in the CMR itself.. B. Yes we can maintain PT at item level per line item. On condition that Business Item should be checked in Item catery

    What are the effects of having different payment terms at the line item level ?
    Ans. invoice split occurs

    What is SAP invoice splitting ? What are the some of the parameters that you have seen that resulted in invoice split ?

    Ans. A) Payer B) Billing date C) Payment terms

    Can you give some examples of payment terms used in your most recent project ?
    ans: Sorry, I don’t have realtime exp

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