When you enter a purchase order, you may want to identify installments that reflect negotiated terms of payment. Use the Installments feature to divide the total amount of a vendor bill into several parts to be paid in installments. This enables flexibility to create vendor bills with multiple due dates and due amounts. Then, you can apply a payment to a specific installment, enabling more accurate detail aging data.
Each installment payment can have a distinct due date. For example, a vendor bill total is $120. This total can be broken into three installments of $40 each, as follows:
- Installment 1 – Total due = $40, Due Date is October 30
- Installment 2 – Total due = $40, Due Date is November 30
- Installment 3 – Total due = $40, Due Date is December 30
To calculate the balance overdue or to calculate finance charges on late payments, aging is based on the installment payment due date, not transaction date. Single or multiple payments can be made either before or after the due date. You can pay amounts on different due dates as determined by the defined installment terms. The vendor bill posts to the Accounts Payable account on the payment transaction date.
To pay vendors in installments, you must set up your account for the Installments feature. First, enable the Installments feature and set preferences. Next, create Installments Terms to define how installment payments are made.
Follow this procedure to enable vendor payment installments in your account.
To enable the Installments feature:
- Go to Setup > Company > Enable Features.
- Click the Accounting subtab.
- Check the following boxes:
- Installments
- A/R
- A/P
Click > Save
Follow this procedure to set preferences for vendor payment installments.
To set preferences for installments:
- Go to Setup > Accounting > Preferences > Accounting Preferences.
- Click the General subtab.
- Under Accounts Payable, check the Allow Bill Consolidation of POs with Different Terms box.
- Click Save.