To ensure cash discounts are posted correctly using the net method, what must be set correctly?

To ensure cash discounts are posted correctly using the net method, the payment terms in the vendor master or the purchase order must be set correctly.

Payment terms define the conditions under which a discount can be applied and the timing for payments. When using the net method, it's essential that these terms clearly outline the timeline for discounts, as they directly influence how the system calculates and posts cash discounts. Properly configured payment terms ensure that the system recognizes the discount eligibility based on the invoice date and any relevant conditions, such as the discount percentage and payment deadline.

In contrast, invoice validation settings, tax codes, and vendor payment methods play essential roles in specific functionalities within the procurement process but do not directly impact how cash discounts are calculated and posted. For instance, while invoice validation contributes to verifying the correctness of the invoices before they're posted, it doesn't affect the discount application. Similarly, tax codes are necessary for calculating taxes on transactions but do not interact with discount settings. Vendor payment methods determine how payments are processed but do not influence the calculation of cash discount eligibility and application.