Billing terms are the extra charges and deductions you add to invoice lines: VAT, freight, import duty, insurance, TDS and discount. Each term knows how it is calculated, whether it is added or deducted, and which ledger it posts to. It also knows whether it becomes part of the item's cost (a "landed cost").
When to use it
At setup, to define the terms your invoices use. After that you pick these terms on purchase and sales invoices.
Where to find it
Masters > Others > Billing Terms.
The fields on this screen
| Section | Field (on screen) | What to enter | Required |
|---|---|---|---|
| Billing Terms | Bill Terms | Name of the charge or deduction as it appears on the bill, such as Freight or Discount. | Yes |
| Billing Terms | Terms Code | Your own short code for this term. It is optional and is not checked for duplicates. | No |
| Billing Terms | Terms Type | Whether this term applies to Purchase, to Sales, or to Both. | Yes |
| Billing Terms | Bill Terms Category | Discount or Additional Tax. It decides how the amount is treated. | Yes |
| Billing Terms | Calculation Basis | Whether the charge is worked out on Value or on Quantity. Choose N/A to type the amount yourself. | Yes |
| Billing Terms | Sign | Plus adds the amount to the bill; minus takes it off. | Yes |
| Billing Terms | Order | (not explained yet) | No |
| Billing Terms | Suppress Zero | (not explained yet) | No |
| Billing Terms | Ledger | The account this charge posts to. | Yes |
| Billing Terms | Affects Inventory Cost | Tick if this term capitalizes into inventory value (freight/duty/clearing); off for recoverable VAT / withholding TDS. | No |
| Rate % | Default percentage for this charge, such as 13 for VAT. Leave it blank when the rate differs on every bill. | No |
Adding a record
- Open Masters > Others > Billing Terms and click Add / New.
- Enter the Bill Terms name, then choose the Terms Type and Category.
- Pick the Ledger it posts to, the Calculation Basis and the Sign.
- Tick Affects Inventory Cost only for landed-cost terms (freight, duty, insurance).
- Click Save.
What's already there
Your demo company comes with Freight, Import Duty, VAT 13% (Sales), VAT 13% (Purchase), Insurance (Landed), TDS Withholding and Outward Freight.
Tips and common mistakes
- Each name must be unique. Re-using one gives a "billing term with this name already exists" message.
- Get the Sign right. VAT and freight are usually
+(added); TDS and discounts are-(deducted). - Affects Inventory Cost turns a term into a landed cost, which raises the item's value. Use it only for freight, duty, clearing and insurance. Leave it off for recoverable VAT and for TDS.