Trading Terms

April 9, 2019 in Accounts Receivable

Purpose

This function is used to create, update and delete Trading Terms settings for use in the Accounts Receivable ledger.

Trading Terms contain descriptive details of various sets of debtor trading terms that are used when providing credit to your customers.

You may specify ‘Standard Trading Terms’ for your business as a System Option. You can then override those standard terms per Customer Account if you need to give specific customers extended terms, or if you need more control and less risk through shorter terms.

Trading terms are used to perform credit checking during Sales Order processing.

Data Input

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Step 1 – Customer Trading Terms Code

Customer Trading Terms Code

Enter a new, unique customer trading terms code, that does not already exist on the system.
You may select an existing customer trading terms code for editing.
For details on the use of “codes”, see The Role of “Codes” in Online Advantage
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Step 2 – Description

Trading Terms Short Name

Enter the short name – up to 10 characters, to describe the trading term. The short name is used on reports and screens where space is limited.

Trading Terms Name

Enter the name of the trading term.
Note this description is also printed on the standard Online Advantage invoice to reinforce your trading terms to the Customer.
For more details on descriptions, see The Role of “Names & Descriptions” in Online Advantage

Type Code

Select the type of trading term.

The trading terms type code is used by the Sales Order Entry module to perform credit checks. Outstanding invoices for the debtor are analysed to determine if the debtor has exceeded the trading terms set out under this code. Using the Nett method, the invoice date is used to determine their position whilst the Month End method rounds all outstanding invoices up to the last day of the month for the month they were invoiced, and uses that date for comparison.

No. of Days for Credit Checking

Enter the number of days credit you want to provide a customer using this trading terms code, before their orders will be placed on credit stop.
Note that this number of days is on top of the date calculation made by the Type Code. For instance, an invoice dated March 13th, and a trading terms code with a 49 day credit check will see the customers orders placed on credit stop on until May 2nd using the Nett method, whilst using the Month End method the credit stop will not come in to effect until May 19th.

Terms Type

Release SymbolSelect from:

  • Cash
  • Cash on Delivery
  • Credit

Giving the trading term a specific type allows us to use it to control software behaviour for trading terms. For example, for ‘COD’ terms, the ‘Limit to one delivery at a time’ prompt below is relevant and the input is enabled when that term type is selected. Another example of use is that we do not offer a ‘Pay Later’ option in e-commerce if the customer’s terms are ‘Cash’.

Limit to one delivery at a time

This option is for ‘Cash on Delivery’ (COD) terms only.

If a Customer is set to COD ‘credit limit’ and the Trading Terms has this option selected, then only one delivery at a time may be in progress for the Customer. If an order or invoice is outstanding for the Customer, then subsequent orders are placed on credit hold and must be released from credit hold before a second invoice can be produced.

This prevents a customer from making multiple orders and thus building up an ‘account’ balance. It also allows you to combine deliveries to save costs.

Override Mandatory/Optional Customer Order Number

Release SymbolIf this is option is selected, the mandatory/optional behaviour for the ‘Customer Order Number’ prompt in Sales Orders for Customers that are using this Trading Terms setting will be the inverse of the system wide setting in System Options.

If left unselected, the mandatory/optional behaviour will match the system wide setting – or the User Details override setting if present.

Document History Note Retention

Under the Notes Category function you can specify the retention period for notes recorded under the system category ‘DH-Document History’. An override retention period is provided here in Trading Terms because Document History for Cash customer accounts can be of a higher volume than other account customers if you are operating in a counter sales environment. This override allows you to enter a shorter retention period of Document History for customers using the trading term.

For the purposes of simplicity, a year is treated as 365 days and a month as 30 days. No leap year or variable month days are taken into account for retention purposes.
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