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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / AX2012 Payment Terms -...
Microsoft Dynamics AX (Archived)

AX2012 Payment Terms - Examples of when to use COD?

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Posted on by Joanna-AX 330

Hello,

I'm trying to help a client understand when and why they might use COD as a payment term in AX2012. There is some difficulty in understanding why a COD can have an assigned ledger account, but other terms do not require this.

Can anyone help me explain this or provide examples that the client might find useful?

Thank you!

Joanna

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  • Joanna-AX Profile Picture
    Joanna-AX 330 on at
    RE: AX2012 Payment Terms - Examples of when to use COD?

    Hi Zvika and Andre

    Thank you  both very much for this response! It is very helpful! I think I understand the process a little better as well which will be helpful when working with the client!

    Thanks,

    Joanna

  • Verified answer
    ZvikaR Profile Picture
    ZvikaR 152 on at
    RE: AX2012 Payment Terms - Examples of when to use COD?

    First of all, the COD option works when also selecting the 'Cash' checkbox on the Term of Payment.

    As Andre already said, this functionality is used when it is assumed that the customer pays immediately, and in Cash, at the time of delivery.

    In addition to "new customers" I have also seen it used when selling products to employees (who pay on the spot) or other 'casual' consumers.

    When you post an invoice for a sales order marked with terms of COD/Cash the system will create 2 sets of transactions instead of the usual 1:

    1. The 'invoice transaction', debit to customer account, credit(s) to revenue account(s) as defined on the order line(s)
       
    2. The settling transaction: credit to customer account (hence removing any outstanding balance from the customer sub ledger), debit to the ledger account as specified on the Payment Terms record.
      1. This second transaction will automatically be marked as settling the invoice transaction and closing it
         
      2. The debit to the ledger account reflects the cash received. This account can stand for a 'petty cash' account, or as a clearing account until the cash is deposited into a bank account (and a journal is posted to reflect that)

    IMHO, the fact this functionality can naturally represent  only cash payments makes it of limited usefulness.

  • Verified answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 299,026 Super User 2025 Season 2 on at
    RE: AX2012 Payment Terms - Examples of when to use COD?

    Hi Joanna,

    In the past I implemented it when the company had new customers. The first three orders should be paid on delivery. The payment method (COD) and the ledger accounts takes care of settling the invoice directly when it is posted. The paid amount is on the ledger account. They used the packing slip for delivering the goods. A day after the invoice was sent.

    After the three deliveries, negotiations started to get delivered on account.

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