In Adagio Receivables, when the payment terms for a customer has been entered into their file will the system automatically apply the terms if the payment is within the terms specified? For example, terms entered as 2% 10 Net 90 is a 2% discount if the payment is made within 10 days. When I receive the payment and enter it into Adagio within that 10 days, will Adagio automatically discount the invoice being paid by the 2%?

Being a small company, we've never had to deal with this before and now that we have a customer with these terms and I am trying to apply the payment, it keeps trying to enter a discount in the amount of the 2% within the terms.

Hi Ryan,

When a customer has payment Terms that allow for an early payment discount, new invoices for this customer will use that Terms code, unless you choose to change this on the invoice. Posting this invoice will save all the terms information, including the discount date and the percentage.

When a payment is entered for this invoice, if the document date is not later than the discount date, the discount percentage will automatically be calculated for you, and the payment amount applied to the invoice will be reduced by the discount amount.

Here is a link to a short video on how Payment Terms work in Adagio Receivables.

Yes, after I thought about it, I thought this might be the case but wanted to confirm it so I knew how to handle it going forward. I will watch the video from the link you sent me. Thank you so much for getting back to me so quickly!

Hi Ryan,
In practice, a 2% 10 Days results in payments being received on or around the 10 days of the invoice date.

If the discounted payment is received and applied in 12 days (within Adagio Receivables), you have to manually adjust for the discount amount or backdate the payment (to let the system calculate the payment). Both of the options are ugly and inefficient, if as a rule you are still planning to give the discount on the payment of the open invoice if they are close to the 2% 10 Day terms.

A practical option to deal with slightly late payments is to show the terms as 2% 10 days but use the configuration options to change the discount period to be say 12 to 15 days. That way, the system calculates the discounted amount and you don't have to force the amount or backdate the payment date.

It can have negative implications if you are aging your AR statements by Due Date (by extending the due date), but again in practice we see that not many customers follow that aging by Due Date on their AR statements.

Best,
Brian