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Payment Terms and Disbursements

Contents:

  1. How to request updates to your payment terms or settlement options
  2. Letter to Suppliers for Payment Terms (PDF)
  3. Standardized Payment Terms & Settlement Options
  4. Early Payment Discounts

Standardized Payment Terms & Settlement Options

diagram of vendor invoice terms

Settlement Options

Payment Plus (preferred)

  • Vendor receives an email from US Bank with a link to a one-time credit card number
  • Vendor benefits from faster receipt of their money
  • UC Davis benefits through US Bank incentives and more efficient processing

ACH w/ discount (preferred)

  • Vendor receives direct deposit into their bank account from an Automated Clearing House (ACH)
  • Vendor benefits from faster receipt of their money
  • UC Davis benefits from early payment discounts and more efficient processing

Paper Check (discouraged)

  • Vendor receives a paper check in the mail
  • Costly for vendor, as they have to deposit checks and wait for money
  • Costly for UC Davis, as we have to print and mail checks

Early Payment Discounts

When Discounts Apply

  • Discounts are applied if the payment is approved within the number days allowed by the payment terms selected on the Purchase Order
  • (Approval Date) – (Invoice Date) <= Discounts Days Allowed
  • The Disbursement Date, or payment date, is the maximum allowed to receive a discount, or the maximum allowed by the payment
  • If the Purchase Order and the Invoice have conflicting payment terms, UCD will take the more advantageous terms when processing payment
  • Discount terms are not available on sub-award invoices

What is Discounted?
Early payment discounts apply to the entire order, less shipping or freight charges.
Sales tax is calculated after discounts are applied.

Example: $100 invoice line, $10 shipping, 7.5% tax rate, 2% discount
$100 x .02 = $2 discount = $98 line amount after discount
$98 x .075 = $7.35 sales tax
$100 line + $7.35 tax + $10 shipping - $2 discount = $115.35 net