What are payment terms and how do they work?

Payment terms are part of master data maintained in Enterprise Resource Planning (ERP) system. They are imported from ERP and configured in Ariba. Following article explains how to configure Payment Terms: How do I edit payment terms in Ariba Administrator?

Payment terms on requisitions/purchase orders (PO):

For requisitions, it is set based on the below order based on it's availability:

• SupplierPorgCombo.csv (Applicable to SAP variant only)
• SupplierLocation.csv
• Parameter DefaultPaymentTerms(example: "Net27")
• Parameter Application.Procure.CustomFieldForPaymentTermsDefaulting

Note:

• For non-catalog items on requisitions, payment terms are defaulted only when users change the Supplier field. When users update the Contact field (to change to a different supplier location), there currently isn't any re-defaulting mechanism in place. To request the re-defaulting of payment terms when changing the supplier location, Create an improvement request in Customer Influence to have this functionality evaluated for a future release.
• If the payment terms are not configured in the Ariba P2P system, payment terms value is not populated on loading it via SupplierPorgCombo.csv or SupplierLocation.csv. Please refer to the following article for additional information: How do I map payment terms to Suppliers using the "PurchaseOrgSupplierCombo.csv" file
• A new parameter Application.Procure.CustomFieldForPaymentTermsDefaulting was introduced to default payment terms based on a custom field.
• For requisitions which have a contract linked to them, payment terms is defaulted from the contract. It is first set on the requisition when the supplier is selected. However, if a contract gets auto-linked, the payment terms is overridden from the contract.

Payment terms on PO-based invoices:

1. When supplier creates an invoice in the SAP Business Network using the PO invoice template, system prefills the data based on the source document PO. Supplier does not have the option to change the payment terms in this case.
2. The invoice generates the invoice reconciliation (IR) and matches the fields against the source document (PO). In no instances does a PO-based invoice go into a payment exception due to the payment term.

Payment terms on non-PO based invoices (EDI/cXML suppliers):

1. For an invoice created by the supplier in the SAP Business Network and sent through EDI/cXML using the non-PO template, no data prefills from source document, the supplier can provide any payment term by selecting Add to Header. With this action, an open text box allows the supplier to enter the payment term if desired (not a required field).
2. You may want to configure a custom invoice exception type that autorejects invoices if the payment terms do not match any preconfigured payment terms in your SAP Ariba Buying or SAP Ariba Invoice Management solution (that is if the invoice reconciliation process discovers a payment terms mismatch exception).

Payment terms on contract-based invoices:

1. Invoice created by the supplier in the SAP Business Network using the contract invoice template and picking up data from information set in a contract:
   The Payment Term field pre-fills with the payment term set in the contract if one exists (Payment Term is not a mandatory field in the contract). If no payment term appears in the contract, the Payment Term field on the invoice template remains blank. In either case, the supplier can change the payment term through a drop-down box built into the template.
2. The invoice generates the IR and matches it against the source document (contract).
3. If the payment term in the invoice differs from that in the contract, a payment exception generates. (Header level exception: ChangedContractPaymentTerms).
4. The payment term never uses the DefaultPaymentTerms (example: "Net27") with a contract-based invoice.?

Payment terms on a buyer-created manual invoice:

The payment terms are set from the SupplierPorgCombo.csv(Applicable to SAP variant only) or SupplierLocation.csv if configured there. If not, then they come from DefaultPaymentTerms (example: "Net27").

DefaultPaymentTerms does default the payment terms, but only on the documents created in the SAP Ariba Buying and Invoicing solution (requisition/invoice).

For Copy Orders refer to How are Payment Terms defaulted in Copy Orders?

Invoicing
Invoicing > Non-PO Invoice
Purchasing > Requisitioning > Requisitioning Payment Terms