Customer Payment Terms

Table of Contents

• Overview
• Key Features
• Requirements
• Creating a Custom Payment Method
• Assigning Net Terms to Customers
• Creating Custom Order Statuses

Overview

Offering customer payment terms is an incredibly powerful way to sell to other businesses. It allows businesses to place orders from you and pay at standard net term windows, like Net15, Net30, etc. Each customer can have their own credit limits and terms.

Key Features

• Enhanced Cash Flow Management: Allowing users to utilize their credit limit through net terms enables businesses to better manage their cash flow. 
• Increased Customer Loyalty: Implementing net terms for customers fosters a sense of trust and commitment, significantly enhancing customer loyalty. 
• Competitive Advantage: Offering net terms can serve as a competitive differentiator in crowded marketplaces. Businesses that provide flexible credit options stand out from competitors who require upfront payments.
• Streamlined Purchasing Process: With the ability to use their credit limit, customers experience a smoother, more efficient purchasing process. This eliminates potential financial barriers at the point of sale, allowing for quicker decision-making and facilitating larger orders.

Requirements

You must have a custom payment method configured in order to utilize payment terms. This custom payment type must be configured in a specific way to allow the net payment type to be used by only specific customers or customer groups. Follow the steps in the next section to configure your custom payment method.

Creating the Custom Payment Method

1. Navigate to the Custom Payment Method configuration by clicking Settings > Payments and then Custom Payment Methods
2. Click New in the upper right corner of the section
3. Add a payment name, for example, “Net Terms” or “Credit Account”
4. Leave admin only unchecked. This allows the method to be used by customers.
5. Set a sort order, if needed. The lower the number, the higher it will appear on the checkout. 
   1. NOTE: Be sure to modify the sort order of other payment methods if needed to order them as you need. If there are 2 methods with the same sort order, the store will display those 2 alphabetically.
6. Add a cost modifier and select the type, either a percentage or a static amount, if needed. This will increase the cost, if needed, to cover additional costs associated with utilizing payment terms.
   1. TIP: You should always disclose additional fees or charges to your customers ahead of time.
7. You enable payment splitting if needed. Companies can utilize a credit card if they have reached their credit limit and need to split it between their credit account and a credit card.
8. "Apply Payment Method" will automatically apply the payment to the customers balance when they place the order. Leave this disabled if you need to manually approve/apply the payment.
9. Add a description, if necessary. This will only be shown in the admin panel and is not customer facing.
10. Add a custom order confirmation message which will be included in the order confirmation. This can be used to include the PO number if needed on the email. To display the field value, you can use the name of the field in the following merge code: ##CUSTOMPAYMENTFIELD[Field Name]##
11. Create any custom payment fields that are needed. This can include fields for accounts payable emails, fields for internal account numbers, etc.
12. Save the Custom Payment Method.
13. Navigate to Settings > Payments > General.
14. Scroll down to the Custom Payment Methods section, and check the box to make the Net Terms payment method you just created Inactive. This will prevent B2C users, guests, etc from utilizing this payment method.
    

Assigning Net Terms to Customers

There are 2 ways to assign this Net Terms payment method to customers. You can manually assign it to each customer. This works when you have a limited number of B2B customers. You can also create a Customer Type for all of your B2B customers and assign the Net Terms to that type. This is ideal for stores with more B2B customers since you are able to make changes to payment methods, shipping methods, etc and apply them to the entire type instead of individually.

Assigning Net Terms to Specific Customers

1. Navigate to the Customers section by using the left menu.
2. Find the customer you need to assign the terms to and click the Edit icon
   
3. In the left menu for the customer, select Payment and Taxes. 
4. In the Taxes and Payment section, use the drop menus for Payment Net Terms and select the length of the payment terms and enter the credit limit for this customer.
5. Scroll down to the Custom Payment Methods and use the drop menu to make it Active.
6. Click Save in the upper right corner.

Assigning Net Terms to Specific Customer Groups

1. Navigate to the Customer Types section using the left menu, Settings > People > Customer Types.
2. If a B2B customer type has not been configured, click New in the top right corner.
3. Add in the name for the customer type, for example “B2B” or “Net Terms”
4. You can add a description in, but it is not shown to customers.
5. You can update the login redirect link, if needed, to a custom page. This can be useful if you have some sort of custom page for this specific customer type. 
6. If needed, check the box to prevent this customer type from earning rewards points.
7. Leave See Pricing enabled.
8. Leave Disable Login unchecked.
   1. This setting can be used to add customers to a user group that cannot use your site in the case of overdue invoices for example.
9. Leave Disabled Login Redirect URL blank.
   1. This setting can be used to direct a disabled user to a specific page notifying them their account is overdue for example.
10. If you have default payment terms, such as Net 15 or $1500 credit limit, you can add them here. This will allow all of your customers in this customer type to have the same starting point. It can be overridden at the customer level if needed.
11. In the Custom Payment Availability section, set the Net Terms method you created before to Active.
12. You can then add customers either manually one at a time or in bulk with an import to this customer type to allow them to utilize the payment methods.
    1. See https://support.americommerce.com/hc/en-us/articles/201905550-Creating-New-Customers-Accounts for more information on adding customers to a customer type.

Creating Custom Order Statuses

We recommend configuring several custom order statues to ensure orders are managed, they can be shipped and paid properly. We recommend creating the following order statuses:

• Submitted, Not Approved
• Shipped, Not Paid
• Order Completed

When an order is placed on credit terms, the recommended process is:

1. An order is placed, the initial order status may be Submitted, Not Approved. This covers any orders that require any sort of approval.
2. When the order is approved, either by your staff or the customer’s management (see order approvals), the next order status is Approved, Pending Shipping.
3. Once an order is shipped, it is placed into the next status, Shipped, Not Paid. The order stays in this status until the customer pays the invoice, either using a card in their My Account, or by mailing payment. 
4. If an order is paid by check, we recommend applying the Custom Payment type Net Terms that we created earlier and adding the check number and the date it cleared in the Payment Note.