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Configuring Terms Of Payment

Configuring Terms of Payment

Terms of payment is used in SAP to determine the due date and discount calculation. Terms of payment is maintained in vendor master and customer master to default at invoice level however this can be changed at invoice level as well.

  • For FI invoices payment terms is defaulted from “Accounting View” for customer and vendor. FB60/FB70
  • For Purchasing invoices payment term is defaulted from “Purchasing View” in Purchase Order / MIRO Invoices
  • For Customer Invoices from SD side the payment is defaulted from “Sales Data” view.


Let us see the configuration and field explanation for payment term fields in detail –

  • Payt Terms: This field contains four characters alphanumeric identifier for payment term key.
  • Sales text: Maintain the short text for explanation. The explanation can be maintained up to 30 characters. This field validates the account type “Customer”. If you maintain the text here and account type “Customer” is not “Selected” system will give you an error as below.


  • Day limit: This field is used to specify the particular term of payment is valid from which particular date. Example as below –

Example 1 – Payment Term T001

Day Limit   – 20

Discount – 5 %

As per above details system will consider this payment terms for the invoices posted in system ON or BEFORE 20th date in every month and applies 5% cash discount. The discount won’t be applicable for invoices posted after 20th in month.

Example 2 – Payment Term T001

Day Limit   – 31

Discount – 2 %

As per above details system will consider the invoices for 21st to 31st and applies the 2% discount.

This perfectly suits where the requirement is – the invoices posted upto 20th should have 5% discount and invoices posted in date range of 21st to 31st should apply discount of 2%.

  • Own explanation: This field is used to give detail explanation of the payment term. Be careful while using this field because this field overrides the explanation automatically generated by system based on discount percentage and days entered.

Example 1 –

In below example system has updated the explanation as per days and percentage entered in “Explanations” section.


Example 2 –

Now if I maintain the “Own Explanation” system will override the “Systems automatically generated” explanation. Refer below image –


  • Account Type –
    • Customer: If payment term is intended to use for “Customer” please select this check box.
    • Vendor: If payment term is intended to use for “Vendor” please select this check box.
  • Baseline Date Calculation –
    • Fixed day:  This field signifies the “calendar fix day” for base line date calculation.
    • Additional Months: Value maintained here is used to add the calendar month for base line date calculation.

See below example –


In above case the base line date would be 15th of the next month.

  • Pmnt block/pmnt method default –
    • Block Key: The value maintained in this field signifies the block key for payment. If block key is maintained here the system proposes the block key along with terms of payment.
    • Payment Method: If user wants to maintain the payment method here other than customer/vendor master it can be maintained here as an identifier.

  • Default for baseline date –
    • No Default: Selecting “No Default” here means system prompts user to enter baseline date as own.
    • Posting date: Selecting this means posting date mentioned will be same as “Baseline Date”.
    • Document date: Selecting this means document date mentioned will be same as “Baseline Date”.
    • Entry date: Selecting this means “Systems Date” will be same as “Baseline Date”.

  • Payment terms –
    • Installment payment: Check this field if user wants to break down the invoice line items with different due dates.Use the installment payment term functionality to achieve this.
    • Rec Entries:Supplement fm Master: Selecting this indicator means, for recurring entries the payment is term is fetched from master record if does not found in line item.
    • Percentage: The percentage rate which will be used to calculate the discount.
    • No. of days: Maintain the number of days for the discount rate is valid. Like if payment received within 10 days 3% discount will be granted. So maintain the 3% in percentage field and 10 days in “No. of days” field.
    • Fixed date: This field is used to determine the fix day of the calendar month as due date.
    • Additional months: Enter the value here if you want to add the months to fix day.


In above example –

  • 5% discount will be granted in the same month.
  • 2% discount will be granted if payment performed before 15th of next month
  • Full payment is due after this.

  • Explanations: This explanation is system automatically generated, unless payment term description maintained in “Own Explanation” field.

Please proivde your valuable comments ! Any suggestions / guidance is welcome !!!


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      Author's profile photo Former Member
      Former Member

      Hello Pankaj,

      The document explains everything very exceptionally. Few more points are cleared with this document. Like sales text , own explanation and day limit functionality.

      As well thanks for sharing knowledge. Keep it up. All the best !!! ūüôā



      Author's profile photo Former Member
      Former Member

      Nice document Pankaj.

      Well drafted and easily explained.


      Charu Jain.

      Author's profile photo Former Member
      Former Member
      Blog Post Author

      Thanks Sharu and Charu for your comments.


      Pankaj Bhalerao.

      Author's profile photo Ajay Maheshwari
      Ajay Maheshwari

      Well done Pankaj!! Nice document.

      Ajay M

      Author's profile photo Former Member
      Former Member
      Blog Post Author

      Thanks Ajay Sir,

      Its always nice to have comments from SAP Legends... Thank you very much, its really encouraging.



      Author's profile photo Sanil Bhandari
      Sanil Bhandari

      Very nicely documented Pankaj Bhalerao

      This information will be very useful for everyone.

      Thanks & regards

      Sanil Bhandari

      Author's profile photo Former Member
      Former Member

      Hi ,

      can any one solve my issue, through APP I want to use payment terms for partial payments. payment terms rules are with in 10 days 10% discount, with in 20 days 5% discount. For the invoice of 10,00,000 I want to clear 600000 with in 10 days(10%) and remaining with in 20 days. (10 %).

      I tried but for partial payments payment terms are not working.


      Janaki panchagnula.

      Author's profile photo Ananth Bhat
      Ananth Bhat

      Nice Document Pankaj.  Additional Question the Payment Block, Block Key is this also used in the Sales Process to your knowledge?

      Author's profile photo Manjunath B L
      Manjunath B L

      Hi Pankaj,

      Thank you for the nice blog! I would like to know, Is it possible to configure a payment term in order to consider 75 days credit from PO creation date? OR it works only with invoice creation/baseline date?


      Highly appreciate your feedback!

      Author's profile photo Ali Mozahid
      Ali Mozahid

      I need help to set up new payment term for  sales  25% w/po- 75% net 7.


      Is this correct , If this is correct how system would know 25% will be paid with respect to PO.





      I have copied one of the existing Payment term



      Author's profile photo Sérgio Ribeiro
      Sérgio Ribeiro

      How to avoid ZTERM_TX1 be populated? Suppose you do not want to write nothing but by default the SD_PRINT_TERMS_OF_PAYMENT is write something on this field.



      Author's profile photo John Mota
      John Mota

      Hello and thank you for this explanation!  One question, when configuring the payment term either through SPRO path or OBB8 we created new payment term for "Lease".  This is a vendor payment term.  In the "Own Explanation" field, the word "Lease" has been entered.  However, when the PO is generated the form has some text like "payable in partial payments".  Where is this text coming from?  It doesn't appear this way in the standard tables T052, T052U & or view V_T052 for PO text.  Also, in table TVZBT the new payment term does not appear.

      We'd like to be able to control what appears on the printed PO as many vendors have different requirements.  Any help on this would be appreciated.


      Author's profile photo Abubakar Bellard
      Abubakar Bellard

      very informative article, easy to understand.

      I have requirement to create a payment term, Customer invoices should show net 30 days but age at 60 days.

      how to achieve this?