Payment terms and installment plans

Payment terms specify all the conditions of a sale's payment to help ensure customers pay their invoices correctly and on time.

Payment terms are generally defined on documents such as sales orders, customer invoices, and vendor bills. Payment terms cover:

• The due date(s)
• Early payment discounts
• Any other conditions on the payment

An installment plan allows the customers to pay an invoice in parts, with the amounts and payment dates defined beforehand by the seller.

Configuration

To create new payment terms, follow these steps:

1. Go to Accounting -> Configuration -> Payment Terms and click on New.

2. Enter a name in the Payment Terms field. This field is the name displayed in the database and is not customer-facing.

3. Enter the text to be displayed on the document (sales order, invoice, etc.) in the Description on the Invoice field.

4. Tick the Display terms on invoice checkbox to display a breakdown of each payment and its due date on the invoice report, if desired.

5. In the Terms section, add a set of rules (terms) to define what needs to be paid and by which due date(s). Defining terms automatically calculates the payments' due date(s). This is particularly helpful for managing installment plans (payment terms with multiple terms).

   To add a term, click on Add a line, define its Due Type and Value, and fill out the appropriate fields to define when the term is due, including any discounts. Due dates are calculated by taking the invoice/bill date, first adding the Months, and then adding the Days. If the End of month toggle is enabled, the due date will then be the end of that month, plus any Days after End of month.

To test that your payment terms are configured correctly, enter an invoice amount and invoice date in the Example section to generate the payments that would be due and their due dates using these payment terms.

Using payment terms

Payment terms can be defined using the Payment Terms field on:

• Contacts: To automatically set default payment terms on a contact's new sales orders, invoices, and bills. This can be modified in the contact form, under the Sales & Purchase tab.
• Quotations/Sales Orders: To set specific payment terms automatically on all invoices generated from a quotation or sales order.

Payment terms can be defined using the Due Date field, with the Terms drop-down list on:

• Customer invoices: To set specific payment terms on an invoice.
• Vendor bills: To set specific payment terms on a bill.

Journal entries

Invoices with specific payment terms generate different journal entries, with one journal item for every computed due date.

This makes for easier follow-ups and reconciliation since Odoo takes each due date into account, rather than just the balance due date. It also helps to get an accurate aged receivable report.