Accounts Payable User GuideVersion 10.0.xPublished May 6, 2014Copyright 2014 Infor. 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All other company, product, trade or servicenames referenced may be registered trademarks or trademarks of their respective owners.Publication InformationRelease: 10.0.xPublication date: May 6, 2014Document Number: APUG_10.0.x_UWA_01ContentsChapter 1: Overview of Accounts Payable.....................................................................................17Accounts Payable Process Flow......................................................................................................17How Accounts Payable Interfaces With Other Lawson Applications...............................................20Using the Accounts Payable Flowchart............................................................................................22Chapter2:SetupOverview..............................................................................................................23Accounts Payable Setup Overview..................................................................................................23Accounts Payable Setup Step-by-Step............................................................................................23Chapter 3: Currency Setup...............................................................................................................28Concepts in this Chapter..................................................................................................................28What Should I Consider Before Setting Up Currency?.................................................................29What Are Setup Requirements for Multiple Currencies?..............................................................29WhatareCurrencyCodes?..........................................................................................................30WhatisCurrencyExchange?.......................................................................................................31WhatisCurrencyRevaluation?....................................................................................................32What are Translation Codes?.......................................................................................................32What are Unrealized and Realized Gain and Loss Accounts?.....................................................33Procedures in this Chapter...............................................................................................................33Defining Currency Codes..............................................................................................................34Chapter 4: Cash Management Setup...............................................................................................35Concepts in this Chapter..................................................................................................................35Accounts Payable User Guide | 3What Is a Journal Book?...............................................................................................................35What Is a Transaction Code?........................................................................................................36What Should I Consider If I Have a New Bank or Account?.........................................................36Procedures in this Chapter...............................................................................................................37Defining a Bank.............................................................................................................................38Defining Cash Codes (Bank Accounts).........................................................................................39Defining Company Cash Code Relationships...............................................................................40Defining a Bank Transaction.........................................................................................................40Defining Cash Payment Formats..................................................................................................42Chapter 5: Terms Setup....................................................................................................................44Concepts in this Chapter..................................................................................................................44Where Are Terms Used?...............................................................................................................44WhatIsAnticipation?....................................................................................................................46What Is a Net Term?.....................................................................................................................46What Is a Split Term?....................................................................................................................47What Is a Fixed Days Term?.........................................................................................................47What Is a Prox Term?....................................................................................................................48Procedures in this Chapter...............................................................................................................49Defining Net Terms........................................................................................................................50Defining Split Terms......................................................................................................................51Defining Fixed Days Terms...........................................................................................................52Defining Prox Terms......................................................................................................................53Defining Prepayment Terms..........................................................................................................53Chapter 6: Tax Setup.........................................................................................................................544 | Accounts Payable User GuideContentsProcedures in this Chapter...............................................................................................................54Completing Tax Setup...................................................................................................................55Chapter 7: Vendor Structure Setup.................................................................................................61Concepts in this Chapter..................................................................................................................61What Are My Options for Vendor Group Setup?...........................................................................61What Are My Options for Vendor Class Setup?............................................................................63Procedures in this Chapter...............................................................................................................64DefiningaVendorGroup..............................................................................................................65DefiningaVendorClass...............................................................................................................67Chapter 8: Payment Structure Setup..............................................................................................69Concepts in this Chapter..................................................................................................................69What Is a Pay Group?...................................................................................................................69What Are Posting and Invoice Companies?.................................................................................72What Is Pay Group Security?........................................................................................................73What Is a Process Group?............................................................................................................74Procedures in this Chapter...............................................................................................................75Defining a Pay Group....................................................................................................................75Defining Pay Group Security.........................................................................................................76Defining Process Groups..............................................................................................................77Chapter 9: Company Structure Setup.............................................................................................79Concepts in this Chapter..................................................................................................................79What Are My Options for Company Setup?..................................................................................79What Are My Options for Process Level Setup?...........................................................................80What Are My Invoice Release and Approval Options?.................................................................81Accounts Payable User Guide | 5ContentsWhat Is System Control?..............................................................................................................83Procedures in this Chapter...............................................................................................................84Defining an Accounts Payable Company......................................................................................85Defining a Process Level..............................................................................................................90Defining Accounts Payable System Control.................................................................................93Chapter 10: Defining Accounts Payable Codes.............................................................................95Concepts in this Chapter..................................................................................................................95What Are System Hold Codes?....................................................................................................95How Do Accounts Payable Codes Default?..................................................................................96Procedures in this Chapter...............................................................................................................98Defining Invoice Accrual Codes....................................................................................................99DefiningDiscountCodes..............................................................................................................99DefiningDistributionCodes........................................................................................................100Defining Hold Codes...................................................................................................................101Defining Income Codes...............................................................................................................101DefiningAuthorityCodes............................................................................................................102Defining Income Withholding Codes...........................................................................................102Defining Secondary Withholding Codes.....................................................................................102Defining Bill of Exchange Accrual Codes....................................................................................104DefiningHandlingCodes............................................................................................................104Defining Reason Codes..............................................................................................................104Defining Add-On Cost Codes......................................................................................................105Defining Contact Codes..............................................................................................................105Defining Diversity Codes.............................................................................................................105DefiningCertificationCodes.......................................................................................................1066 | Accounts Payable User GuideContentsListingAccountsPayableCodes................................................................................................106Chapter 11: Adding and Maintaining Vendors..............................................................................107Concepts in this Chapter................................................................................................................107What Is a One-Time Vendor?......................................................................................................107What Is a Vendor Location?........................................................................................................108What Files Are Updated During Vendor Conversion?.................................................................108What Are Options for Accessing Vendor Information?................................................................109Procedures in this Chapter.............................................................................................................110DefiningaVendor.......................................................................................................................111DefiningCross-ReferenceVendors............................................................................................121Converting Vendor Data..............................................................................................................121Defining Additional Locations for a Vendor.................................................................................124Associating a Vendor With an Accounts Receivable Customer..................................................125Defining Payment Approval Amounts for a Vendor.....................................................................126Defining a Vendor Relationship...................................................................................................126Adding Vendor Comments..........................................................................................................127Adding a New Vendor Address...................................................................................................128Copying Vendors.........................................................................................................................130MaintainingVendors...................................................................................................................130MergingVendors.........................................................................................................................131Rebuilding Vendor Balances.......................................................................................................132Chapter 12: Invoice Processing Overview....................................................................................133Invoice Processing Overview.........................................................................................................133Invoice Processing Step-by-Step...................................................................................................135Accounts Payable User Guide | 7ContentsChapter 13: Entering Expense Invoices........................................................................................138Concepts in this Chapter................................................................................................................138What is Prorating?.......................................................................................................................138What is a Rebate?.......................................................................................................................139What is a Rebate Credit Memo?.................................................................................................139Procedures in this Chapter.............................................................................................................140DefiningInvoiceBatches............................................................................................................141Entering an Expense Invoice......................................................................................................141Adding Invoice Comments..........................................................................................................150CreatingPaymentSchedules.....................................................................................................151Creating Recurring Invoices........................................................................................................152Creating Recurring Journal Entries.............................................................................................152Chapter 14: Entering Other Invoice Types....................................................................................155Concepts in this Chapter................................................................................................................155What Are Invoiced and Accrued Taxes?.....................................................................................155WhatIsaPrepayment?..............................................................................................................156Procedures in this Chapter.............................................................................................................157Entering Taxed Invoices..............................................................................................................157View Landed Tax.........................................................................................................................159Entering Multiple Invoices...........................................................................................................162Entering Transit Invoices.............................................................................................................162EnteringPrepayments................................................................................................................163InterfacingInvoiceData..............................................................................................................164EnteringDetailedInvoices..........................................................................................................166Chapter 15: Releasing Invoices.....................................................................................................1688 | Accounts Payable User GuideContentsProcedures in this Chapter.............................................................................................................168Releasing Batch Invoices............................................................................................................168ReleasingInvoices......................................................................................................................170Approving Invoices for Payment.................................................................................................171Chapter 16: Maintaining Released Invoices.................................................................................173Concepts in this Chapter................................................................................................................173When Can't an Invoice be Canceled?.........................................................................................173Procedures in this Chapter.............................................................................................................174MaintainingReleasedInvoices...................................................................................................174MaintainingDistributions.............................................................................................................175Maintaining a Payment Schedule Adjustment............................................................................177Adjusting Retainage Payment.....................................................................................................178Maintaining a Recurring Invoice Schedule..................................................................................179Cancelling Released Invoices.....................................................................................................180Maintaining Invoice and Vendor Holds........................................................................................180MaintainingReportableIncome..................................................................................................181Applying Credit Memos...............................................................................................................182Chapter 17: Paying Invoices..........................................................................................................183Concepts in this Chapter................................................................................................................183What Logic Is Used to Select Invoices for Payment?.................................................................184How Do Groups Impact Pay Cycles?..........................................................................................185What Happens When I Close a Cash Payment Cycle?..............................................................186Troubleshooting for Payment Closing (AP170)...........................................................................187What Setup Is Required for Electronic Files?.............................................................................189Accounts Payable User Guide | 9ContentsHow Often Should I Close Invoice Distributions?.......................................................................190When Would I Use a Manual Payment?.....................................................................................190Procedures in this Chapter.............................................................................................................191Selecting Invoices for Payment...................................................................................................191Performing a Check Run.............................................................................................................194Creating a Cash Payment Register............................................................................................197Closing a Cash Payment Cycle..................................................................................................198Listing Transactions Affected by Payment Status Updates........................................................199Creating a Cash Payment Tape..................................................................................................199Creating a Flat File for Electronic Payment or Laser Checks.....................................................201Reprinting Checks.......................................................................................................................203ReservingChecks.......................................................................................................................204Creating a Manual Payment for an Unreleased Invoice.............................................................204Creating a Manual Payment for a Released Invoice...................................................................206Closing Invoice Distributions.......................................................................................................209Chapter 18: Closing a Period or Year-End....................................................................................211Procedures in this Chapter.............................................................................................................211Preparing for Period or Year-End Closing...................................................................................211Closing a Period..........................................................................................................................214ClosingYear-End........................................................................................................................216ArchivingInvoices.......................................................................................................................217PurgingData...............................................................................................................................218Chapter 19: Voiding Payments.......................................................................................................220Procedures in this Chapter.............................................................................................................22010 | Accounts Payable User GuideContentsVoidingPayments.......................................................................................................................220Voiding Payment Forms..............................................................................................................222Chapter 20: Processing Employee Expenses..............................................................................224Concepts in this Chapter................................................................................................................224How Does Accounts Payable Setup Affect Employee Expense?...............................................224What Do I Do With an Open Advance Balance at Year-End?....................................................225Procedures in this Chapter.............................................................................................................226Completing Setup for Employee Expense..................................................................................226ProcessingEmployeeAdvances................................................................................................227ProcessingEmployeeExpenses................................................................................................230Processing Employee Paybacks.................................................................................................233Interfacing Employee Expense Data...........................................................................................234Chapter 21: Processing Reportable Income.................................................................................238Concepts in this Chapter................................................................................................................238What Is a Reportable Income Group?........................................................................................238When Do I Need to Run 1099s?.................................................................................................239Can I Add an Income Code After a Vendor Has Been Paid?......................................................239Procedures in this Chapter.............................................................................................................239Completing Setup for Reportable Income...................................................................................240Processing Reportable Income...................................................................................................241Creating French DAS2 Preparation Report................................................................................245Chapter 22: Processing Bills of Exchange...................................................................................246Concepts in this Chapter................................................................................................................246What is a Bill of Exchange?........................................................................................................246Accounts Payable User Guide | 11ContentsWhat Does the BOE Statement Update Program Do?...............................................................247What Does the Bill of Exchange Cashing Update Program Do?................................................247Procedures in this Chapter.............................................................................................................247Creating Bill of Exchange Payments...........................................................................................248Entering a Vendor-Issued Bill of Exchange for an Unreleased Invoice......................................249Entering a Vendor-Issued Bill of Exchange for a Released Invoice............................................250Accepting Vendor-Issued Bills of Exchange...............................................................................250Updating Bills of Exchange.........................................................................................................251Processing Bill of Exchange Distribution Posting.......................................................................251Creating a Manual Bill of Exchange Payment for an Unreleased Invoice..................................252Creating a Manual Bill of Exchange Payment for a Released Invoice........................................253Updating a Cashed or Dishonored Bill of Exchange...................................................................253Canceling a Bill of Exchange......................................................................................................254Chapter 23: Matching Invoices......................................................................................................255Concepts in this Chapter................................................................................................................255Overview of the Match Process..................................................................................................256Overview of the System Logic Used for Matching......................................................................256What Is a Match Pool?................................................................................................................258What Is a Match Level?..............................................................................................................261What Is a Match Type?...............................................................................................................261What Happens If Invoices and PO/Receipts Don't Match?.........................................................264What Is Unique About Entering a Match Vendor?......................................................................264What Is Unique About Entering a Match Invoice?......................................................................265What is Retainage?.....................................................................................................................266How Do I Actually Match Invoices and Receipts?.......................................................................26612 | Accounts Payable User GuideContentsChapter 24: Accessing Accounts Payable Data...........................................................................267Concepts in this Chapter................................................................................................................267What Is a Drill Around?...............................................................................................................267What is Online Analysis?............................................................................................................268Reports...........................................................................................................................................269Mass Retainage Payment Adjustment (AP133)..........................................................................270Vendor, Invoice Audit Report (AP135)........................................................................................270Invoice Accrual Reconciliation (AP136)......................................................................................270Payment Closing (AP170)...........................................................................................................270Invoice Data Archival (AP198)....................................................................................................271Vendor Group, Company Listing (AP200)...................................................................................271Pay Group Listing (AP201).........................................................................................................271ProcessGroupListing(AP202)..................................................................................................271Accounts Payable Codes Listing (AP205)..................................................................................271Vendor Listing (AP210)...............................................................................................................272Comments Listing (AP212).........................................................................................................272OpenPayablesReport(AP230).................................................................................................272Invoice Accrual Reconciliation Report (AP232)..........................................................................272Retainage Invoice Listing (AP233)..............................................................................................272Invoice Payment Approval Edit (AP236).....................................................................................273Hold Payments Report (AP240)..................................................................................................273Cash Forecasting (AP250)..........................................................................................................273Bank Account Payment History (AP255)....................................................................................273Foreign Payment Statistics (AP256)...........................................................................................273Cash Payment Register (AP265)................................................................................................274Vendor Payment History (AP270)...............................................................................................274Accounts Payable User Guide | 13ContentsInvoice Distribution History (AP275)...........................................................................................274Vendor Labels (AP290)...............................................................................................................274Invoice and Vendor History Purge (AP300)................................................................................274GlobalReports...............................................................................................................................275Internal VAT Report (C2201).......................................................................................................275Chapter 25: Using Attribute Matrix Attributes..............................................................................276Concepts in this Chapter................................................................................................................276What is Attribute Matrix?.............................................................................................................276What is an Attribute?...................................................................................................................277What is an Element?...................................................................................................................278Where Can I Use Attributes?......................................................................................................279What is a List?.............................................................................................................................280Procedures in this Chapter.............................................................................................................282Loading Lawson-Defined Attributes and Elements.....................................................................282DefininganAttribute...................................................................................................................283Assigning Attribute Values to a Vendor.......................................................................................285Defining an Automatic List..........................................................................................................286DefiningaManualList................................................................................................................287Interfacing Valid Attribute Value Ranges to Attribute Matrix.......................................................289Chapter 26: Using Lawson Business Intelligence to Create Data Marts...................................291What Is Lawson Business Intelligence?.........................................................................................291Chapter 27: Accounts Payable Audits..........................................................................................293Accounts Payable Audit Analysis...................................................................................................29314 | Accounts Payable User GuideContentsChapter 28: Master File Extracts...................................................................................................295Extracting Data from Item and Location Master.............................................................................295Extracting Data from Item Master Audit.........................................................................................296Extracting Data from Vendor Agreement Master...........................................................................297Extracting Data from IC Company Setup Master...........................................................................298Extracting Data from IC Location Setup Master.............................................................................298Extracting Data from UOM Setup Master.......................................................................................299Extracting Data from Requestor Setup Master..............................................................................299Extracting Data from Vendor Master..............................................................................................300Appendix A: General Ledger Posting...........................................................................................302Programs that Create General Ledger Transactions.....................................................................303AccountsDefined...........................................................................................................................303Base Currency Invoice...................................................................................................................304Nonbase Currency Invoice.............................................................................................................305MultipleCurrency...........................................................................................................................306Intercompany Transaction..............................................................................................................307PrepaymentTransaction................................................................................................................308RecurringInvoiceTransaction.......................................................................................................309EmployeeExpenseTransaction....................................................................................................310Bill of Exchange Transaction..........................................................................................................311Discount at Payment......................................................................................................................312DiscountatMatch..........................................................................................................................313VoidPayment.................................................................................................................................314Cancel Payment.............................................................................................................................315What Dates Are Important for General Ledger Distributions?.......................................................315Accounts Payable User Guide | 15ContentsPosting in Summary Versus Posting in Detail................................................................................316What If My Invoice Accrual Account Is Not Balancing?.................................................................317Index.................................................................................................................................................32116 | Accounts Payable User GuideContents1Overview of Accounts PayableThe Lawson Accounts Payable application is used to enter invoices, create and store vendor records,manage cash flow, and generate payments. This chapter provides a high-level overview of AccountsPayable, including information on the application's major processes and interface with other Lawsonand non-Lawson products. "Accounts Payable Process Flow" on page 17 "How Accounts Payable Interfaces With Other Lawson Applications" on page 20 "Using the Accounts Payable Flowchart" on page 22Accounts Payable Process FlowThe Accounts Payable application can be broken down into four main processes: setup, invoiceprocessing, special processing, and reporting. This section takes a closer look at setting up AccountsPayable and using the application to process invoices and generate reports.Accounts Payable SetupWhile setting up Accounts Payable, you need to consider your payment processing and reportingneeds, determine the company and vendor structures that best fits those needs, and set up yourAccounts Payable application accordingly.Hands-on setup of your Accounts Payable application will include defining the bank accounts out ofwhich you will make payments, the terms under which you will make payments, and the vendors youwill pay.Accounts Payable Invoice ProcessingAccounts Payable invoice processing consists of entering, releasing, and paying invoices. You canalso maintain invoices between the time you release and pay them, and you will be required to closeyour accounting periods.The setup you complete prior to invoice processing can help you streamline invoice entry and manageyour cash flow. For example, you can define codes that will default on an invoice to indicate when theinvoice should be paid and to which accounts the expense should be distributed.Accounts Payable User Guide | 17Accounts Payable Special ProcessingIn addition to entering and paying expense invoices, you can use the Accounts Payable application forother special processing such as voiding payments, paying employee expenses, and generating billsof exchange. You can also track and report on vital information such as reportable income, VAT, andIntrastat.Accounts Payable ReportingAccounts Payable contains programs that will allow you to gather reports on open payables, cashforecasting, payment history, vendor balances, and more. You can also use the Account Payableapplication to complete required federal reporting, such as the submitting reportable income information.Accounts Payable: A Big PictureTo mirror Accounts Payable's major processes, this user guide is divided into four parts: Setup, InvoiceProcessing, Special Processing, and Reporting.The big picture flow illustrates Accounts Payable's four main processes, breaks the processes downinto sub-processes, and serves as a reminder of where you are in the user guide.18 | Accounts Payable User GuideOverview of Accounts PayableFigure 1. Accounts Payable: A Big PictureInvoice ProcessingOverviewRelease InvoicesMaintain InvoicesPaying InvoicesClose a PeriodCurrencyCash ManagementTermsSetupVendor StructurePay GroupsCompany StructureAccounts PayableCodesVendorsReportable IncomeBills of ExchangeAccessing AccountsPayable DataAccessingInformationVoid PaymentsEmployee Expenses Enter InvoicesSetup OverviewTax Intrastat ReportingMatching InvoicesInvoiceProcessingSpecialProcessingAccounts Payable User Guide | 19Overview of Accounts PayableHow Accounts Payable Interfaces With Other Lawson ApplicationsThis section explains how the Accounts Payable application interfaces with other Lawson applications.Figure 2. Application interface: How Accounts Payable interfaces with other applications.Accounts ReceivableAccounts Payable vendors can be defined to have a relationship to customers in the Lawson AccountsReceivable application.In Accounts Receivable you can display balances between your AR customers and AP vendors. Youcan also select open transactions (invoices, debit memos, credit memos, and payments) and interfacea summary debit memo or credit memo into the Accounts Payable application for the selected amount.Asset ManagementIf you define asset invoices, the Accounts Payable application sends the Lawson Asset Managementapplication all information needed to automatically create assets from those invoices.In Asset Management, you can maintain distributions from Accounts Payable.Cash ManagementAccounts Payable uses Lawson Cash Management for updating payment processing information.Bank service charges are also recorded in Cash Management.20 | Accounts Payable User GuideOverview of Accounts PayableCurrencyAccounts Payable uses currency codes and exchange rates defined in the Lawson Currencyapplication.Employee ExpenseAccounts Payable defines the vendors that are used by Lawson Employee Expense.Employee Expense updates Accounts Payable vendor balances, and Employee Expense commentscan be printed on Accounts Payable payments.Employee Expense sends encumbrances to the Lawson General Ledger application.General LedgerAccounts Payable sends journal entry information to the Lawson General Ledger application, updatingexpense and liability accounts.Accounts Payable sends encumbrances to the Lawson General Ledger application.Inventory ControlInventory Control uses vendors that were set up in the Lawson Accounts Payable application.Invoice MatchingAccounts Payable sends vendor information to the Lawson Invoice Matching application.Invoice Matching creates general ledger distributions for invoice and credit approvals and sends themto Accounts Payable. The match process creates a released invoice, which is then sent to AccountsPayable for payment processing.Lease ManagementLease Management sends release and approved invoices to the Lawson Accounts Payable application.PayrollAccounts Payable invoices can be created from deductions such as garnishments and insurancepremiums created in the Lawson Payroll application.Project AccountingAccounts Payable sends committed costs to the Lawson Project Accounting application.The Project Accounting application sends subcontractor time entry to Accounts Payable. In addition,Project Accounting sends payment information to Accounts Payable of invoices paid with an activity.Accounts Payable User Guide | 21Overview of Accounts PayablePurchase OrderPurchase Order uses vendors that were set up in the Lawson Accounts Payable application.RequisitionsRequisitions uses vendors that were set up in the Lawson Accounts Payable application when usersselect a vendor on a requisition.Strategic LedgerAccounts Payable sends user analysis values to the Lawson Strategic Ledger application for analysisand reporting on organizational profitability.A user analysis field is a flexible, user-defined element that stores transaction information to measureprofitability. You can assign user analysis fields to accounts payable distribution lines.TaxYou must set up a Lawson Tax application company and tax code before setting up an AccountsPayable company.TermsTerms lets you assign terms codes to vendors, locations, and invoices in Accounts Payable.Using the Accounts Payable FlowchartThe Accounts Payable flowchart is the basic navigational guide for the Accounts Payable application.It provides a quick and easy way to access the Accounts Payable programs.22 | Accounts Payable User GuideOverview of Accounts Payable2Setup OverviewBefore you start invoice processing, you must perform several setup tasks. By completing these setuptasks, you provide basic information that is vital for invoice processing such as the currency you willuse to pay vendors, the bank you will draw funds from, any special payment terms you've negotiated,and the names and locations of your vendors.This chapter provides an overview of the minimum setup that is required before you can begin processingwith the Lawson Accounts Payable application. Procedures for each step in the process are detailedin the chapters that follow.Use the following setup tasks. "Accounts Payable Setup Overview" on page 23 "Accounts Payable Setup Step-by-Step" on page 23Accounts Payable Setup OverviewYou must complete required setup within Accounts Payable and in other specified Lawson applications.Accounts Payable Setup Step-by-StepThe following table shows the order in which the setup steps should be performed. You can find detailsabout concepts and procedures related to setup in the following chapters and in the additional notedresources.Accounts Payable User Guide | 23For details, see What is required? SetupIn the Currency application, youdefine information about theCurrency application "Currency Setup" on page 28 The Currency User Guidebase currency your companywill be using. If you operate inmultiple currencies, you willneed to define additional detailsthat will be used for currencyexchange. If you have only onecurrency you are only requiredto define: A currency codeThe General Ledger User Guide You must set up the LawsonGeneral Ledger application orGeneral Ledger applicationGeneral Ledger subset beforeyou set up and use AccountsPayable. You will need to defineat least one general ledgercompany and the accounts youwill to post to.You define your bankinformation and paymentCash Management application "Cash Management Setup"on page 35formats in the CashManagement application. At aminimum, you must define: The Cash Management UserGuide At least one bank Bank account(s) at eachbank A relationship between yourgeneral ledger companyand each bank account Each bank transaction youwill require, such aspayment or deposits Each payment format youwill use, such as checks orelectronic files24 | Accounts Payable User GuideSetup OverviewFor details, see What is required? SetupOptional. Use the Termsapplication to define specialTerms application "Terms Setup" on page 44 The Terms User Guidepayment terms you havenegotiated with your vendors.Terms are used to calculateinvoice due dates and earlypayment discounts. While thereis no required setup in theTerms application, defining theterms you use most commonlycan save time and improveaccuracy during invoice entry.You must define a tax companyin the Tax application. Use theTax application "Tax Setup" on page 54 The Tax User Guidetax application to calculate andtrack taxes for taxed invoices.Required setup is dependent onyour specific tax needs, but caninclude: A tax company A tax code master A tax table Tax code options Tax rates"Vendor Structure Setup" onpage 61An important part of managingaccounts payable in yourorganization is efficiently andVendor Structureaccurately maintaining yourvendor records. The AccountsPayable application providesseveral options for organizingand categorizing your vendorrecords. The minimum vendorstructure setup required is: One vendor group One vendor class for eachvendor groupAccounts Payable User Guide | 25Setup OverviewFor details, see What is required? Setup"Payment Structure Setup" onpage 69You define how you want togroup your vendors for paymentprocessing. You can define payPay Groupsgroups that let you consolidatepayments from multiple APcompanies to a vendor. You canalso define process groups tostreamline payment processingif you are dealing with large payruns. A pay group is abovevendor and process groups aredefined at the vendor level. Theminimum setup is one pay group"Company Structure Setup" onpage 79Your accounts payablecompany structure is made upof companies and processCompany Structurelevels. This structure providesa framework for reporting andprocessing. You can use acombination of companies andprocess levels to reflect howyour organization is structured:by physical location, division,departments, cost centers, orother groups. The minimumsetup required is: One accounts payablecompany One process level26 | Accounts Payable User GuideSetup OverviewFor details, see What is required? Setup"Defining Accounts PayableCodes" on page 95You can define a variety ofcodes to use when processingaccounts payable. You assignAccounts Payable Codesthese codes throughout theAccounts Payable application,such as when you define yourcompany or enter invoices.These codes eliminate repetitivedata entry, resulting instreamlined processing andfewer data entry errors. Twocodes are required for setup: An invoice accrual code A discount code"Adding and MaintainingVendors" on page 107You can add vendor records atany time, but often a mass addof existing vendor records isVendorsdone as part of the setupprocess. A vendor is anycompany or person you remitpayments to. You must definea vendor in the applicationbefore you can process aninvoice for that vendor, unlessyou enter a one-time vendorinvoice.Accounts Payable User Guide | 27Setup Overview3Currency SetupThis chapter discusses information that must be defined in the Lawson Currency application prior toaccounts payable processing. This chapter covers only the portions of Currency that are required forprocessing in Lawson Accounts Payable. For more information about all aspects of the Currencyapplication, see the Currency User Guide. "Concepts in this Chapter" on page 28 "Procedures in this Chapter" on page 33Concepts in this ChapterTip: To skip directly to the procedures, see "Procedures in this Chapter" on page 33.The following concepts provide background and conceptual information for the procedures within thischapter. "What Should I Consider Before Setting Up Currency?" on page 29 "What Are Setup Requirements for Multiple Currencies?" on page 29 "What are Currency Codes?" on page 30 "What is Currency Exchange?" on page 31 "What is Currency Revaluation?" on page 32 "What are Translation Codes?" on page 32 "What are Unrealized and Realized Gain and Loss Accounts?" on page 3328 | Accounts Payable User GuideWhat Should I Consider Before Setting Up Currency?If your organization conducts business in only one currency, your considerations for currency setupare clear-cut. The only setup required is to define a currency code that represents the currency in whichyou do business.If you operate in more than one currency, additional planning and setup is required. Before you startyour Currency setup, consider the following: Determine the number of currency codes you need to define, based on the number of currenciesyou will use. Determine if your general ledger company will use currency exchange and if the currency exchangeinvolves triangulated currencies. Determine if your general ledger company will use translation. If so, which translation method isright for the company.What Are Setup Requirements for Multiple Currencies?If your organization conducts business in more than one currency, you must complete additional setup tasks. The following table describes required and optional setup for multi-currency companies. Youcan find detailed procedures for each task in the Currency User Guide.Description SetupIn addition to the one currency code that isrequired by all users, you must define a currencycode for each currency in which you do business.Currency CodesA currency table holds currency relationships,exchange rates, and translation rates in oneCurrency Tableplace. You must define a currency table if youuse multiple currencies. Associate a currencytable with one or more companies to sharecurrency information. This reduces setup andmaintenance time.When you define a relationship between twocurrencies, you specify the rules that should beCurrency Relationshipsapplied for transactions that involve bothcurrencies. A relationship is required for anybusiness transactions that involve two currencies,such as if your base currency is US dollars, butyou have a vendor that bills you in Japanese yen.Accounts Payable User Guide | 29Currency SetupDescription SetupCurrency gain and loss accounts are used to postvariance amounts when there is a differenceCurrency Gain/Loss Accountsbetween the beginning and ending exchangerates for a transaction. These accounts arerequired only if you use multiple currencies.Define the exchange and translation rates usedto convert amounts from one currency to another.Currency Exchange and Translation RatesThere are two ways to define rates: manually orthrough an interface. You must define rates if youwill be exchanging or translating currencyamounts.What are Currency Codes?Currency codes represent any currency in which you conduct business. You must define a currencycode for each base, account, transaction, or report currency you use.Currency codes represent the different currencies that are valid for use in all Lawson applications. Youmust establish at least one currency code before defining the General Ledger company.How are Currency Codes Used?Use currency codes to identify the currencies you use. Based on the currency code entered and theexchange or translation rates defined for the currency code in the currency table assigned to thecompany, the Currency application exchanges, revalues, and translates currency amounts to thecompany base currency. If the company uses reporting currencies, the Currency application alsoexchanges currency amounts to the appropriate company reporting currencies.You can use any currency code as base currency, account currency, transaction currency, or reportcurrency.Description CurrencyBase currency is the functional operating currency assigned to aGeneral Ledger company.BaseBase currency does not need to be the same as the local currency.30 | Accounts Payable User GuideCurrency SetupDescription CurrencyAccount currency is the currency assigned to a General Ledgerdetail account to store nonbase currency amounts. For example, aAccountUS company maintaining a bank account in France might want toassign EUR to the cash account where the bank account balancesare posted.The account currency defaults on General Ledger transactions andis used to calculate account amounts if the account currency isdifferent from the company base currency.Transaction currency is the currency in which a business transactionis conducted; for example a purchase, sale, lease transaction, assetpurchase, or depreciation.TransactionReport currency is an additional currency assigned to a companyor activity group for reporting and analysis only. The report currenciesReport Currencyare calculated in the same manner as the base currency. You candefine up to two report currencies. Report currencies can be revaluedand translated.What is Currency Exchange?Currency exchange is the process used to convert a transaction in a currency other than the basecurrency to the base currency, using daily exchange rates.How is Currency Exchange Used?You can enter a transaction amount in any currency that has been defined in the currency table assignedto the company and from any application that allows transaction entry. The amount is then immediatelyexchanged to the company's base currency, using the currency table exchange rate. All Lawsonapplications accommodate currency exchange.ExamplePierre's Catering Service invoices LGE Corporation for 1500 GBP on March 15. The exchange rate is0.1642. Therefore, the invoice is exchanged to $246.30 (1500 GBP* 0.1642) in the base currency.Accounts Payable User Guide | 31Currency SetupWhat is Currency Revaluation?Currency revaluation is the process of checking nonbase transaction amounts against current exchangerates or translation rates and adjusting the amounts to match the new exchange rates or translationrates, with offsetting amounts sent to a gain or loss account. Revaluation occurs only for accounts thatare flagged to revalue. Currency revaluation occurs in the General Ledger application for the General Ledger accountsthat you mark for revaluation.If your company has reporting currencies, the General Ledger application can also revalue nonbasetransaction amounts to the reporting currencies.Tip: For information about setting up Accounts Payable and Accounts Receivable accounts forrevaluation, see the Accounts Payable User Guide or the Accounts Receivable User Guide. Currency revaluation occurs in the Accounts Payable and Accounts Receivable applications forvendors and customers that you mark for revaluation using Vendor (AP10.1) or Customer (AR10.1).Important: Account currency is not revalued.What are Translation Codes?For each currency relationship in which you want to translate a company's financial statements, youmay need to define several sets of rates, depending on the financial statements you want to translate.To differentiate between sets of rates for the same currency relationship, the Currency application usestranslation codes. Translation codes identify the rate type and ensure that the correct translation rateis applied when translating an account. For balance sheet accounts, you need to use translation rates that represent the last rate in effectfor each period. (Rate Type = Ending) For income statements, you need to use translation rates that represent the average rates for eachperiod. (Rate Type = Average) For some balance sheet accounts, such as fixed asset accounts, you may also want to use historicaltranslation rates representing the rates in effect on the date of a transaction. (Rate Type = Historical)Tip: A Historical rate does not mean a rate that never changes. If the translation code for theHistorical rate is defined with changing rates, the account balances will be updated according tothe rate in effect for the translation code at the time of the translation. Use the Historical Balance type to have the translated amount calculated by adding historicaltranslated balances to the current period activity and translated at the period rate.A translation code is assigned to each chart of accounts detail account. The Currency applicationprovides two default translation codes that it automatically assigns to chart of accounts detail accountsas follows:32 | Accounts Payable User GuideCurrency Setup Chart Section One (Balance Sheet) detail accounts are assigned a translation code of BS (BalanceSheet) with a rate type of E (Ending). Chart Section Two (Income Statement) detail accounts are assigned a translation code of IS (IncomeStatement) with a rate type of A (Average).You can also define your own translation codes and assign them to any detail account. Any accountassigned that translation code will be translated using the rates you define for the relationship andtranslation code.What are Unrealized and Realized Gain and Loss Accounts?Realized gain and loss accounts are used to post the difference resulting from a change betweenthe exchange rate in effect at the time a transaction is entered and the exchange rate in effect at thetime the transaction is closed. For example, if you enter an invoice with an exchange rate, and the ratechanges by the time you pay the invoice, the system posts the difference to a realized gain or lossaccount.Only one set of currency gain and loss accounts must be set up. This value will default for individualcurrency relationships, if the currency code and system code fields are left blank. If you want to trackgains and loss by currency relationship, you can set up specific currency gain and loss accounts forspecific currency relationships and system codes.Unrealized gains and losses occur if a transaction that was journalized during the period is stilloutstanding at the end of the period. Unrealized gain and loss accounts are used to temporarilyaccount for any changes in the currency exchange rate from the transaction date to the period endingdate. Entries made to unrealized gain and loss accounts are reversed automatically (Accounts Payableor Accounts Receivable) or manually (General Ledger) in the subsequent period.Important: The General Ledger does not generate any entries to the realized gain or loss accounts.Accounts Payable and Accounts Receivable are the only applications using these accounts. GeneralLedger will post the values that are sent from the Accounts Payable and Accounts Receivableapplications.Procedures in this ChapterYour currency setup requirements are dependent on the number of currencies your organization uses.If your organization conducts business in only one currency, all you are required to set up is onecurrency code. If your organization conducts business in more than one currency, your requirementswill be more complex. Those setup procedures are detailed in the Currency User Guide.Use the following procedures to set up currencies. "Defining Currency Codes" on page 34Accounts Payable User Guide | 33Currency SetupDefining Currency CodesCurrency codes are required for all companies. If your company conducts business in one currency,you define only one currency code.To define currency codes1 To define a single currency code, access Currency Code (CU01.1). or To define multiple currency codes, choose the Multiple Entry button on CU01.1 to access CurrencyCodes (CU01.2).Tip: To create a common language of currency codes, define currency codes based on the standardinternational currency and ISO country codes.2 Define a currency code for each currency in which your company conducts business. Two or morecurrency codes are required to perform currency exchange or currency translation. Use the followingguidelines to enter field values:Use this field to type an additional description of the code that prints onLawson-defined printed forms such as checks.Forms ExpressionThis field determines the number of decimals used to display currencyamounts.Number of DecimalsUse this field to type the alphanumeric International Standards Organization(ISO) currency code to associate with your user-defined code.ISO CodeUse this field to type the International Standards Organization (ISO)number associated with the country using the currency. This number isused in electronic transactions by third-party credit card processors.ISO NumberRelated Reports and InquiriesUse ToCurrency Codes Listing (CU201) List currencies34 | Accounts Payable User GuideCurrency Setup4Cash Management SetupBecause you will be using Lawson Accounts Payable to pay vendors, you will need to define the banksand bank accounts you will draw on for those payments. This chapter covers information you arerequired to define in Lawson Cash Management prior to accounts payable processing. For moreinformation about all aspects of Cash Management, see the Cash Management User Guide. You canalso set up bank services and BOE (Bill of Exchange) payments in this application. For more information,see "Processing Bills of Exchange" on page 246. "Concepts in this Chapter" on page 35 "Procedures in this Chapter" on page 37Concepts in this ChapterTip: To skip directly to the procedures, see "Procedures in this Chapter" on page 37.The following concepts provide background and conceptual information for the procedures within thischapter. "What Is a Journal Book?" on page 35 "What Is a Transaction Code?" on page 36 "What Should I Consider If I Have a New Bank or Account?" on page 36What Is a Journal Book?A journal book is used to post all entries in detail to the general ledger, with similar transactions groupedtogether. A journal book has two components: Header: the definition and parameters associated with the journal book Detail: the transactions assigned to a journal bookJournal books are used to provide greater detail in the general ledger for the cash and accounts payableaccrual accounts. Journal book processing is a requirement in certain countries.Accounts Payable User Guide | 35If your company processes by journal book, you must assign all transactions to a journal book number.Auditors can use these journal book numbers to track transactions to their origins. These numbers arealso helpful in tracking transactions you have interfaced from non-Lawson applications.You can define a default journal book on System Control (GL01.1). If you select a journal book numberin this field, during posting the system assigns this value to transactions that originate from this systemcode for the company without a journal book value. This value will not default to the AP transactionduring transaction entry. For details about defining a journal book, see the General Ledger User Guide.What Is a Transaction Code?In the Accounts Payable application, a transaction code represents a type of payment. You must definea transaction code for each type of payment you plan to use, such as manual checks, system checks,electronic files, and bills of exchange. You might also see transaction codes referred to as paymentcodes on some forms.If you use other Lawson applications, you may also define transaction codes for banking services youwill require, such as deposits and withdrawals.What Should I Consider If I Have a New Bank or Account?If, after initial setup, you begin banking at a new institution or get a new account, you will need to adjustyour Cash Management setup. Use the procedures in this chapter to define a new bank, define a newcash code (bank account), establish a relationship between the company and the cash code, and attachthe new cash code to each transaction code you will use.Paying Invoices From a New Cash CodeIf all invoices from an old cash code are going to be paid from a new cash code, you can override thecash code on existing invoices. When you run Cash Requirements (AP150), select your old cash codein the Selected Cash Code field and select the new cash code in the Override Cash Code field. Anyinvoices with the old cash code which are selected for payment will be paid from the new cash code.To have all invoices (regardless of the current cash code) paid from the new cash code, leave theSelected Cash Code field blank. Any invoice selected for payment will be paid from the new cash codeyou identify in the Override Cash Code field.You can change the cash code for individual, unreleased invoices using Basic Invoice (AP20.1) orTaxed Invoice (AP20.2). For invoices that are released, use Payment Schedule Adjustment (AP30.3)to make changes to the cash code.Changing the Cash Code DefaultYou can change the cash code that defaults on invoices when you enter them. Do this by editing thecash code on each process level and company. Making a change to a process level will only affect36 | Accounts Payable User GuideCash Management Setupinvoice entered after you make the change. You will need to change invoices that are already entered.For more information, see "Paying Invoices From a New Cash Code" on page 36.In addition, inquire on the pay group using Pay Group (AP01.1) and change the default in the CashCode field to the new cash code. If you do not want to change the pay group default, you can overrideit on Company (AP00.4) or Process Level (AP00.5).Preventing Payments From an Old Cash CodeUse the following steps to make sure that invoices don't pay from an old cash code: Use Cash Code (CB00.2) to inactivate the old cash code Use Process Level (AP00.5) to check for and change any process levels that use the old cash codeas a default Run Open Payables Report (AP230), Cash Forecasting (AP250), or Cash Requirements (AP150)for the old cash code to identify invoices using that cash codeProcedures in this ChapterThe following procedures represent the required setup in the Cash Management application. "Defining a Bank" on page 38 "Defining Cash Codes (Bank Accounts)" on page 39 "Defining Company Cash Code Relationships" on page 40 "Defining a Bank Transaction" on page 40 "Defining Cash Payment Formats" on page 42Accounts Payable User Guide | 37Cash Management SetupFigure 3. Procedure relationship: Cash Management setupDefine a BankDefine Cash Codes(Bank Accounts)Define Company-CashCode RelationshipsDefine a CashPayment BankTransactionDefine Cash PaymentFormatsDefining a BankA bank represents the actual institution or physical location where you do your banking. You mustdefine at least one bank. This procedure outlines the process for defining a bank.To define a bank1 Access Bank (CB00.1).38 | Accounts Payable User GuideCash Management Setup2 Define the address and contact information for the bank. Use the following guidelines to enter fieldvalues:Type the routing number of the bank in this field. If you will be makingBACS (Banker Automated Clearing System) payments, this value mustbe numeric. ACH and EDI files require a routing number.Bank IdentificationIf you use the Lawson Accounts Receivable application and perform bankrisk processing, use the Credit Risk subform to define credit lines usedfor remitting bills of exchange at a discount.Credit ButtonDefining Cash Codes (Bank Accounts)A cash code represents a bank account at a bank. You may have more than one account at a bank,such as a savings account and a checking account. The accounts you define can be used by AccountsPayable, Accounts Receivable, and Cash Management. The following procedure outlines the processfor defining a cash code.Note: Accounts Receivable also uses cash codes, so if an account has both Accounts Receivable andAccounts Payable transactions, you do not need to set them up twice.To define a cash code (bank account)1 Access Cash Codes (CB00.2).2 Define bank account information. Use the following guidelines to enter field values:If you will issue electronic payments from this account and will need tosend the payment to another bank, enter the routing number of thereceiving bank.Electronic TransferBankUsed with matched invoices. For more information, see the InvoiceMatching User Guide.ROI RateDecide whether to require bank statements for this account to bereconciled. Select Yes to add a bank statement in Bank Statement(CB06.1), enter and process associated transactions, then close the bankstatement by running Bank Statement Close (CB191).Statement RequiredTo assign security to a cash code, click the Security button. Security ButtonAccounts Payable User Guide | 39Cash Management SetupDefining Company Cash Code RelationshipsYou must define a relationship between a general ledger company and a cash code for the companyto be able to process transactions for a specific bank account. You also have the option of definingjournal books for the transaction codes associated with the company cash code relationship. Thisprocedure outlines the process for defining company cash code relationships.Need More Details? Check out the following concepts: "What Is a Journal Book?" on page 35To define a company cash code relationship1 Access Company Cash Code Relationships (CB00.3).2 Select the company and cash code you want to define a relationship for. Continue to complete theform, considering the following fields.Select the general ledger cash account to be used for posting accountspayable payments and accounts receivable deposits.Cash AccountSelect a general ledger bank transfer account for bank transfers to or fromthe cash code for the company.Transfer ClearingAccountSelect a general ledger payment account for processing cash ledgerpayments.Payment ClearingAccountSelect a general ledger EFT/credit card extract account for processingcash ledger EFT and credit card extracts.EFT/CC ExtractClearing AccountIf you do not want to manually reconcile differences between issuedamounts and cleared amounts for a transaction, type a range that indicatesthe variance you are willing to tolerate.Over ReconcileTolerance and UnderReconcile ToleranceIf you defined reconciliation tolerances, select the variance account to beused for posting variance amounts within the defined tolerances.Variance AccountIndicate whether a general ledger entry is created from the cash accountto a reconciliation account when the company reconciles a transaction forthe cash code.Reconcile EntryIf the company uses journal books to group general ledger transactions,click the Journal Book button to select default journal books. For moredetails about defining journal books, see the Cash Management UserGuide.Journal Book buttonDefining a Bank TransactionYou define codes to represent the various bank transactions you will use in accounts payable. Youmust define a transaction code for each type of payment you plan to use, such as manual checks,40 | Accounts Payable User GuideCash Management Setupsystem checks, and electronic files. This procedure describes the process for defining bank transactionsfor your cash payments. For more information, see "Processing Bills of Exchange" on page 246.Need More Details? Check out the following concepts: "What Is a Transaction Code?" on page 36To define a bank transaction1 Access Bank Transaction Definition (CB00.4).2 Define a Transaction Code and a Description for the code.3 Select Cash Payment Transaction in the Transaction Category field.4 Select Active in the Status field.5 Click the Cash Payment button to define cash payments.6 Use the following guidelines to enter values on Cash Payments (CB00.7):The transaction origin will generally be Accounts Payable. Select AccountsReceivable only for Electronic Fund Transfer (EFT) payments that aretriggered by the Accounts Receivable application.Transaction OriginSelect one of three output options for the cash payment code: No Output Printed Document Tape or Electronic FileOutput OptionCash payments will always be numeric. Transaction NumberingIf you selected No Output or Printed Document in the Output Option field,this field indicates whether the payment numbers you assign to manualpayments in Invoice Entry (AP20) or Manual Payment (AP155) must bereserved in Manual Forms Reservation (AP81.1). The default value is N.Manual PaymentReservation7 On the Reconciliation tab, use the following guidelines to enter field values:To have all cash payments for this code be automatically consideredreconciled when they reach Cash Management, select Yes. If you selectNo, you must reconcile those cash payments manually in the CashManagement application.AutomaticReconciliationIf you selected Tape or Electronic File in the Output Option field, select apayment summarization option. Determines the Cash Managementsummarization breaks for payments.PaymentSummarization8 On the Electronic Payments tab, use the following guidelines to enter field vaues:Accounts Payable User Guide | 41Cash Management SetupIf you select Tape File Record in the Output Option field, this field indicateswhether the processing bank must be pre-notified with bank accountinformation before an Accounts Payable ACH payment can be createdfor a vendor.PrenotificationIf you select Yes in the Prenotification field, select a valid cash paymenttransaction code. This field is then used to create an alternate cashpayment for a vendor until the processing bank has been pre-notified.Alternate TransactionCodeThis field is the format of the electronic payment. Payment FormatThis field contains the payer identification information. Organization IdentifierThese are comments to be sent to the bank. Payment Instructions 1& 2User definable fields can be used to capture any data that the user wants. User Fields 1 & 29 On the Global tab, use the following guidelines to enter field values:Type the payer account number. Payer Account NumberType or select the Payment Date Option. Pay DaySelect Yes if the Company wants to make payments including vendorswith Plusgiro accounts via bank transfer file. Default is No.PlusGiro PaymentsWith BankGiroSelect whether to merge bank account and payments. Default is 0 (merge). Merge OptionDefining Cash Payment FormatsYou select formatting options for each type of cash payment you will be using. Formatting options areinformation about the actual payment, such as the starting document number and whether the remittanceshould be attached or separate. This procedure outlines the process for defining cash payment formats.To define a cash payment format1 Access Cash Payment Formats (CB00.5).2 Select the cash code and transaction code you want to define a format for. Complete the rest of theform, considering the following fields.Select a format for the cash payment from the list of values. Cashpayments can be produced in several formats.Note: If you are using AP161, set the format to Electronic File. If you areusing AP160, set the format to ACH Tape.Format42 | Accounts Payable User GuideCash Management SetupIf you are defining a printed document and you want the checks to startwith a number other than 1, type the starting document number you wouldprefer.Starting DocumentNumberSelect the format for a remittance. Your options include: always attaching the remittance to the payment, with overflow linesprinting on voided payment forms always attaching the remittance to the payment, with overflow linesprinting on a separate remittance form printing the remittance on a separate form than the paymentRemittanceIf printing remittance forms, type the number of lines to print on theattached or original remittance form. If left blank, 14 defaults.Attached Detail LinesIf you selected Overflow in the Remittance Option field, type the numberof detail lines to print on the overflow remittance form. If left blank, 58defaults.Overflow Detail LinesSelect the language in which you want to print payment documents andremittance forms.LanguageIf you selected ACH Tape, Electronic File, SWIFT File, or ETEBAC Filein the Format field, select a valid bank transaction code that will create abank transaction adjustment when the bank rejects the payment tape orfile record.Rejection CodeAccounts Payable User Guide | 43Cash Management Setup5Terms SetupIf you have negotiated special payment terms with a vendor or have established corporate guidelinesfor when you pay invoices, you will want to define those terms in the Lawson Terms application. Theterms you define are used to calculate invoice due dates and discount information. You can assign aterms code to vendors, customers, invoices, debit memos, and purchase orders. This chapter highlightsthe kind of terms available and describes the process for defining terms. "Concepts in this Chapter" on page 44 "Procedures in this Chapter" on page 49Concepts in this ChapterTip: To skip directly to the procedures, see "Procedures in this Chapter" on page 49.The following concepts provide background and conceptual information for the procedures within thischapter. "Where Are Terms Used?" on page 44 "What Is Anticipation?" on page 46 "What Is a Net Term?" on page 46 "What Is a Split Term?" on page 47 "What Is a Fixed Days Term?" on page 47 "What Is a Prox Term?" on page 48Where Are Terms Used?The following Lawson applications use terms codes defined in the Terms application: Accounts Payable44 | Accounts Payable User Guide Accounts Receivable Billing Bills of Exchange Invoice Matching Order Entry Purchase OrderAccounts PayableYou can assign terms codes to vendors, locations, and invoices in the Accounts Payable application.Accounts ReceivableYou can assign terms codes to debit memos, customers, and invoices in the Accounts Receivableapplication. Terms codes are used to automatically calculate invoice due date and discount information.BillingYou can assign terms codes to invoices for ship-to customers in the Billing application. Terms codesare used to automatically calculate invoice due date and discount information.Bills of ExchangeTerms codes are used to calculate due dates for recreated bills of exchange and create open itemdebit memos in the Bills of Exchange application.Invoice MatchingYou can assign terms codes to invoices in the Invoice Matching application. Terms codes are used toautomatically calculate invoice due date and discount information. You can use the invoice date, receiptdate, or receipt of invoice to calculate the invoice due date.Order EntryYou can assign terms codes to orders in the Order Entry application. Terms codes are used toautomatically calculate invoice due date and discount information.Purchase OrderYou can assign terms codes to purchase orders in the Purchase Order application. Terms codes areused to automatically calculate invoice due date and discount information.Accounts Payable User Guide | 45Terms SetupWhat Is Anticipation?Some vendors may discount your purchase when payment is made prior to even receiving an invoice.This anticipation discount is based on the number of days between the payment date and the invoicedate, so the earlier you pay the greater the discount you receive. The anticipation discount rate is thepercentage used to calculate the discount amount. this type of discount is primarily used in the retailindustry.You can define anticipation discount terms for a multiple payment or split terms code. If you define aterms code for anticipation invoices, you must define an anticipation discount rate for each accountspayable vendor that uses the terms code.CalculationTo calculate the discount amount for an anticipation invoice, the application subtracts the invoice payment date from the invoice due date to calculate the number of days paidearly, divides the number of days paid early by 365 days, multiplies the result by the anticipation discount rate, and multiplies the result by the payment amount to calculate the discount amount.((days paid early / 365 days) * (anticipation discount rate)) * paymentExampleAssume payment for an equipment purchase valued at $100,000 is made 10 weeks (70 days) prior tobeing invoiced. The anticipation discount rate is 10%. Days paid early = 70 70 / 365 = 0.19 0.19 * 10% = 0.04 0.04 * 100,000 = $4,000 discountWhat Is a Net Term?Net terms are used to establish a net due date based on a set number of days from the invoice date.The program calculates the discount amount and the discount date from the discount percent and thediscount day.For the discount logic to be valid, both the discount percent and discount day must be entered. Thediscount percent cannot be