Grace Periods in Accounts Receivable

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Grace Periods in Accounts Receivable. We have numerous customers setup with a payment terms of 2 % 10th Net EOM. Grace Period is set to 9. So as long as we receive the check BY the 10th, the system takes the appropriate discount on every single invoice for that customer. We do allow extra time for the mail, so every month we receive their checks by the 14th or 15th of the month, and we still allow the discount. However, once the actual date of the month goes past the 10th, GP will NO LONGER honor any discount. In order for us to post these checks, we have to manually go in to EACH and EVERY invoice they are paying and manually type in the discount amount. As you can imagine, this takes forever and has resulted in much frustration in our AR department. Isn't there a way to set GP up to bypass this extremely manual process ? We are using GP 2013.

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Redbeard 12,931 on at

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If your policy is actually the 15th, then set the Grace Period to 15. This should prevent this extremely manual process. There is a setting in GP to take non-qualifying discounts when cutting checks. This is a clear indicator this is standard practice for a lot of companies, so if you're not going to enforce the Grace Period, extending it to the date you actually consider to be a line in the sand makes sense.

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You discussed AR settings in the first sentence then you slipped right into the AP section and stayed there. We have already tried setting the Grace Period in AR to 15. The Grace Period appears to be directly connected to the payment terms in AR. Our Payment terms in AR for the discount is set to Date and it's our understanding it needs to be set to days - but how do we do that when our terms are 2% 10th Net EOM and we invoice daily.

The 10th of the month is a different number of days based on invoice date. Any thoughts ? I wanted to send you a screen shot of our Discount terms setup on the card but was unable to put it in this field.

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zulfi721 on at

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Mathew use rich formating and then a popup window will open

From there choose insert picture and then post.

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Community Member on at

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Hey - that worked ! Thank you. So here is the screen shot showing our payment terms setup in AR.

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zulfi721 on at

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Mathew try to save the screen shot in GIF format as it allows to upload pic of size 64 kb

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Community Member on at

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So this is a screen shot of our AR payment terms setup for 1% 10th Net EOM

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Frank Hamelly | MVP... 46,625 Super User 2025 Season 2 on at

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I know this doesn't help you now but GP 2015 offers more flexibility in terms and discount settings. See this blog post - www.erpsoftwareblog.com/.../whats-new-gp-2015-payment-terms-flexibility

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Redbeard 12,931 on at

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Sorry for any confusion I created - I was simply pointing out that GP systematized taking discounts after deadlines had lapsed when making payments to vendors - but I digress.

You can call your payment Terms pretty much anything you want, then assign settings as you have above. You have selected "Use Customer/Vendor Grace Periods for Date/EOM Payment Terms". The Grace Period for Due Date and Discount Date are maintained separately on the Customer Maintenance Window, so there is quite a bit of flexibility in this setting. Have you entered Grace Periods for the Customer(s) in question?

Setting the Grace Periods allows you to be firm with some customers, while extending some additional time to customers who may be farther away, or who just plain have a better relationship with. I hope this helps, and please feel free to disregard my ramblings about taking expired discounts when cutting checks.

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Redbeard 12,931 on at

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Grace periods are just that - extra days, in addition to the standard setup, which will allow you to extend the discount beyond the normal due date or discount date (one setting for each). It sounds to me like you should enter a 5 day grace period for discount date.

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