Let’s talk about terms

2010_0630_terms_window Both Invoice and Bill share the same Payment Terms list. From the Lists menu, select Customer & Supplier Profile List, and follow by the Terms List to open up the Terms List window.

Terms can be either ‘Standard’ or ‘Date Driven’. 

Net 30 (30 days) Net 60 (60 days) or Net 90 (90 days) payment terms are Standard terms that we usually give to customer or received from supplier. In the Terms list window, ‘1% 10 Net 30’ and ‘2% 10 Net 30’ are special default Terms created by QuickBooks Asia. Both are 30 days terms.  ‘1% 10 Net 30’ means 1% discount given if payment did within the ten days from the Bill date.

2010_0630_terms_bill When using either ‘1% 10 Net 30’ or ‘2% 10 Net 30’ Payment Terms type in Bill, there will be an extra discount due date besides the ‘Terms’. Example: If Bill date is 1 June 2010, the discount date will be 11 June 2010 (10 days from the Bill Date; and the Bill due remaining as 1 July 2010 (thirty days from Bill date).

QuickBooks will not automatically deduct the Bill amount for you; it serves as a reminder. You have to physically calculate the discount amount and enter it into QuickBooks via a Journal if you make a payment within the ten days grace period.

First type of Date Driven Terms is ‘Net due before the x th day of the month’, example: if you set ‘Net due before the 5 th day of the month’ for a bill dated 7 June 2010, the Bill Due will be 5 July 2010 (that is fifth day of next following month). However, if your bill dated 2 June 2010, the Bill Due will be 5 June 2010 (fifth day of the current month).

Another type of Date Driven Terms is ‘Due the next month if issued within x days of due date. Example: if you set ‘Due the next month if issued within 10 days of due date’ on a Bill dated between 1 to 21 day of June 2010, the Bill Due will be 1 July 2010 (first day of next month). However, if you set the date between 22 June 2010 and 30 June 2010, the Bill Due will be 1 August 2010 (calculated backward from First day of next month).

Join my QuickBooks training class to have a better understanding of how QuickBooks can work for you.

2 responses to “Let’s talk about terms

  1. Both are workable terms, the type of terms used will be subjected to the type of business operation.

  2. small business financial software

    Interesting article. But what do you think is the best between the two date driven terms? Thanks for the post! Keep it up!
    Denise