Automated Payment Terms on Invoices

Here's the updated version with that clarification:

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Payment Terms Overview

Payment terms are assigned to customers and control how late fees are automatically calculated and applied to overdue invoices. Each customer must be assigned to a payment term, even if the late fee amount is set to zero.

Configuring Payment Terms

When creating or editing payment terms, you can customize the following settings:

Payment Term Name

• Must be unique across all payment terms
• Used for internal identification and customer assignment
• Examples: "Net 30," "Due on Receipt," "Standard Terms"

Late Fee Label

Customize how late fees appear on invoices and customer statements. This is a separate field from the payment term name and controls the customer-facing label for charges.

• Examples: "Late Fee," "Service Charge," "Finance Charge," "Interest Charge"

Late Fee Calculation

Late fees can be configured as either a percentage or a flat dollar amount:

• Percentage-based fees -- Any value from 0.00% to 5.00% of the outstanding balance
• Flat dollar fees -- Any value from $0.00 to $100,000.00

Days Until Late Fee

Specify how many days after the invoice date the late fee should be applied:

• Any value from 0 to 365 days

Grace Period

Optionally provide a grace period before late fees begin accruing:

• Any value from 0 to 30 days

Maximum Late Fee Cap

Set a maximum total late fee amount to prevent fees from exceeding a specific threshold:

• Any value from $0.00 to $1,000,000.00

Using Zero-Fee Payment Terms

You can create payment terms with 0% or $0 late fees. This is useful when:

• You want payment terms to display on invoices without charging late fees
• You prefer to add late fees manually using invoice adjustments
• Certain customers require special payment arrangements without automatic penalties

Even when late fees are set to zero, customers must still be assigned to a payment term.

Activating Payment Terms

Payment terms must be set to Active status in order to be assigned to customers. Inactive payment terms cannot be selected during customer configuration but remain in the system for historical reference.