Finance terms are used for customer orders/invoices with open receivables that will become the property of a trade receivable financing institution. Finance terms are defined in Payment Terms Maintenance. Orders with finance terms are always put on finance hold and a credit task is created. When an approval number is received from the financing institution, the order can be released.
To set up finance terms, first create a Finance Company type customer for the financing institution in Customer Maintenance. Then, create a payment terms code with the Finance check box selected in Payment Terms Maintenance, and enter the financing institution. A discount may optionally be entered. This would be a percentage discount on the receivables financed by the financing institution. If a discount is entered, a general ledger account can also be entered to store discount amounts.
To enter a sales order with finance terms for a customer, the customer must be allowed to use finance terms. To allow a customer to use finance terms, select the Approved for Finance Payment Terms check box on the Payment Terms tab in Customer Credit Rule Maintenance for the customer, or in Group Credit Rule Maintenance for the customer's credit group or credit division.
To create a financed customer order, select a finance terms payment terms code for an order in Order Entry. The customer’s order will automatically be placed on hold with the Finance Hold reason.
To release the credit hold for a financed order, use Credit Task Management. An approval code must be entered to release the order. The approval code should be provided by the financing institution. This implies the order has been approved as financed. During the accounts receivable general ledger posting, accounts receivable will be transferred to the financing institution.