Establish payment terms in the DMS system

The role of the Accounts Payable Clerk is important in the dealership setting.  The Accounts Payable position impacts cash on a daily basis, is responsible for paying for expenses in a timely fashion as well as accurately record those expenses.   One example of managing cash is by setting payment terms for each vendor that the organization conducts business with.  Payment terms is defined as the conditions under which a vendor (your completes a sale transaction with the organization or dealership. The payment terms cover:

  • When payment is expected
  • Any conditions on that payment
  • Any discounts the buyer will receive

Common Invoice Payment Terms

  • PIA – Payment in advance
  • Net 7 – Payment seven days after invoice date
  • Net 10 – Payment ten days after invoice date
  • Net 30 – Payment 30 days after invoice date
  • Net 60 – Payment 60 days after invoice date
  • Net 90 – Payment 90 days after invoice date
  • EOM – End of month
  • 21 MFI – 21st of the month following invoice date
  • 1% 10 Net 30 – 1% discount if payment received within ten days otherwise payment 30 days after invoice date
  • COD – Cash on delivery
  • Cash account – Account conducted on a cash basis, no credit
  • Letter of credit – A documentary credit confirmed by a bank, often used for export