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Writer's pictureBenito Ramirez

Dynamics 365 Business Central Training: Payment Terms

Updated: Dec 3, 2024

Dynamics 365 Business Central offers a robust platform for managing your business processes, including the configuration of payment terms. Properly setting up payment terms helps streamline your accounts receivable and accounts payable processes, ensuring timely payments and better cash flow management. This Dynamics 365 Business Central training guide provides detailed, step-by-step instructions on how to configure payment terms in Dynamics 365 Business Central, complete with examples and formulas for clarity. 


Understanding Payment Terms 

Payment terms define the conditions under which a sale is made, specifying the period within which the payment is expected. Common payment terms include net 30, net 60, or specific early payment discounts like 2/10 net 30 (2% discount if paid within 10 days, otherwise net 30 days). Configuring these correctly in your system ensures both parties understand the expectations and obligations. 


Key Components of Payment Terms 

  • Due Date Calculation: Determines when payment is due. 

  • Discount Date Calculation: Specifies the date by which a discount can be applied. 

  • Discount Percentage: The discount amount offered for early payment. 


Step-by-Step Guide to Configuring Payment Terms

 

Step 1: Access the Payment Terms List

1. Open Dynamics 365 Business Central. 

2. From the main dashboard, navigate to the Search bar and type "Payment Terms." 

3. Select Payment Terms from the search results. 

Searching for payment terms

Step 2: Create a New Payment Term 

1. In the Payment Terms window, click on New to create a new payment term. 

2. Fill in the Code and Description fields. For example, use NET30 as the code and Net 30 Days as the description. 


Step 3: Configure the Due Date Calculation 

1. In the Due Date Calculation field, specify the formula for the due date. For a net 30 days term, enter 30D. 

2. Example formula: 30D means the due date is 30 days from the invoice date. 

Example of Net 30 payment terms configuration

Step 4: Set Up Discount Terms (Optional) 

1. If you offer early payment discounts, fill in the Discount Date Calculation and Discount % fields. 

2. For example, for a 2% discount if paid within 10 days, enter 10D in the Discount Date Calculation field and 2 in the Discount % field. 

3. Example formula: 10D means the discount is applicable if payment is made within 10 days from the invoice date. 


Step 5: Save and Apply the Payment Term 

1. After configuring the desired settings, click Save. 

2. The new payment term is now available for use in sales and purchase documents. 


Practical Example: Configuring 2/10 Net 30 Payment Term 

Let’s say your business offers customers a 2% discount if they pay within 10 days, and otherwise, the full amount is due within 30 days. 


Example Setup: 

  • Code: 2/10N30 

  • Description: 2% 10 Days, Net 30 

  • Due Date Calculation: 30D 

  • Discount Date Calculation: 10D 

  • Discount %: 2 


Example Formulas: 

  • Due Date Calculation: 30D (due 30 days from the invoice date) 

  • Discount Date Calculation: 10D (discount applies if paid within 10 days) 

  • Discount %: 2 (2% discount for early payment) 


Example of 2/10 Net 30 payment terms configuration

Additional Tips 

  • Review Payment Terms Regularly: Ensure they reflect current business policies and market conditions. 

  • Communicate Clearly: Make sure your customers and suppliers are aware of the payment terms to avoid misunderstandings. 

  • Utilize Reports: Use Business Central’s reporting tools to monitor payment term effectiveness and cash flow implications. 


Conclusion 

Configuring payment terms in Dynamics 365 Business Central is a straightforward process that can significantly enhance your financial operations. By following these step-by-step instructions and leveraging the provided examples, you can ensure that your payment terms are set up correctly and efficiently. This will not only improve your cash flow management but also foster better relationships with your customers and suppliers. 

 

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