Invoices, grace periods, and payment due dates

When customers purchase products, the marketplace generates invoices that the product owners must pay. However, the precise date on which payment is due can vary between marketplaces or even between different companies in the same marketplace. These discrepancies are due to the interactions between several different configurable and default settings. It is important for a billing administrator to understand how these settings interact to ensure that invoices are paid on time.

The following factors combine to determine the effective payment due date:

• Grace period—Set at the marketplace level by the Marketplace Manager, the grace period is a number of days after the invoice due date. The buyer must pay the invoice before the grace period expires. If the buyer does not pay the invoice and the grace period expires, the subscription is suspended.
  Marketplace Managers configure grace periods as part of marketplace billing settings. See Configure subscriptions.
• Payment terms—Refers to a period of time after the invoice creation date after which the invoice becomes due. By default, there is a five-day term for all companies in all marketplaces. However, if the Invoice Settings feature is enabled on your marketplace, Marketplace Managers can set different payment terms that they can then apply at the company level. For example, they could create a 10-day payment term and apply that term to a specific marketplace company, but retain the default five-day term for their other companies.
  For more information on payment terms, see Configure payment terms.
  If you want to enable Invoice Settings for your marketplace, contact your AppDirect technical representative.
• Invoice due date—Calculated at the company level by adding the payment terms to the invoice creation date. Therefore, the invoice due date can vary by company depending on whether there are payment terms in effect for a company.

Example

As an example, the SampleMarket marketplace has a five-day grace period and two companies: Company A and Company B. Company A uses custom payment terms (seven days), while Company B does not use any custom payment terms (therefore, they use the default five-day terms).

Subscriptions were purchased in each company on January 1, and therefore invoices were created on the same date. In this scenario:

• The invoice due date for Company A is January 8 (invoice creation date of January 1 plus the custom payment terms of seven days). If the buyer does not pay the invoice, the five-day grace period takes effect on January 9, and expires on January 13. If the buyer does not pay, the subscription is suspended on January 13.
• The invoice due date for Company A is January 6 (invoice creation date of January 1 plus the default payment terms of five days). If the buyer does not pay the invoice, the five-day grace period takes effect on January 7, and expires on January 11. If the buyer does not pay, the subscription is suspended on January 11.