What is payment terms? Meaning and explanation

Payment terms set out the period within which an invoice must be paid and under which conditions. Common terms are 14 or 30 days after the invoice date, sometimes with a discount arrangement such as 2% off for payment within 8 days. For commercial transactions between businesses in the Netherlands, a statutory payment term of 30 days applies if nothing else has been agreed.

For a firm, payment terms determine the due date of an open item, and therefore cash flow planning, reminders and the ageing analysis of receivables and payables. Incorrectly recorded terms lead to wrong due dates and confusion during reconciliation, for example when a customer takes an early payment discount and pays less than the invoice amount.

Autoboeker reads payment terms from invoices or creates them, for all four connected packages. It also checks for deviating payment terms, so you see when a supplier suddenly applies different conditions than usual. That flag is part of the broader checks for deviations, high amounts and unknown suppliers.