Payment terms specify when payment is expected from a customer. Common terms include payment on receipt, net 7, net 14 and net 30 (meaning payment due within that many days).
Payment terms define the conditions under which you expect to receive payment for goods or services. Standard terms include: COD (Cash on Delivery), payment on receipt, net 7 (due within 7 days), net 14, net 30, net 60 and net 90. Some businesses offer early payment discounts like 2/10 net 30 (2% discount if paid within 10 days, otherwise full amount due in 30 days). Setting the right payment terms is a balance between cash flow (shorter terms mean faster payment) and customer relationships (longer terms may win more business). Your terms should reflect your industry norms, your cash flow needs and your customers' expectations. Different customer segments may warrant different terms. In Xero, payment terms are set per customer and automatically calculate due dates on invoices. SortBooks monitors payment patterns and helps identify customers who consistently pay late, enabling you to adjust terms or follow up more proactively.
SortBooks helps with the bookkeeping behind payment terms by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing payment terms by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
An invoice is a document sent to a customer requesting payment for goods or services provided. It includes details of the transaction, payment terms and the amount due.
Cash flow is the movement of money in and out of your business. Positive cash flow means more money coming in than going out. It is often considered more important than profit for business survival.
An ageing report categorises accounts receivable or accounts payable by the length of time invoices have been outstanding, typically in 30-day buckets (current, 30, 60, 90+ days).
Credit terms are the conditions under which a seller extends credit to a buyer, specifying when payment is due and any discounts for early payment.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.