Dictionary / Terms
What does Terms mean in accounting?
Quick definition
GeneralConditions of payment. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
Read more below
Examples
Set 2/10 Net 30 on a customer invoice
You run an awning shop. On November 12 you create an invoice to a pediatric-office client for $2,350 of clinic canopy work, and in QuickBooks Online you set Payment terms to 2/10 Net 30. Those terms are the conditions of payment printed on that invoice: $47 off if they pay by November 22, otherwise the full amount is due December 12. They pay $2,303 on November 19. Receive that payment against the invoice and code $47 to discounts given so accounts receivable goes to zero. The terms field is what told QuickBooks the discount date; do not leave $47 sitting on the aging.
Ignore the printed terms and pay late
You run a bakery. A flour mill bills you $1,730 on July 21 for flour, terms 2/10 n/30. You ignore those conditions, treat the bill like pay-when-you-can, and send $1,730 on September 3. You missed the July 31 discount window ($34.60) and you are two weeks past the August 20 due date. Enter the payment against the accounts payable bill at the full $1,730; there is no cash discount left to take. Next time, sort the pay-bills list by the terms dates, not by whoever emailed last.
Why it matters
Terms are the payment conditions on a sale or a purchase: when the balance is due, and whether an early-pay cut is on the table. You will see them on most customer invoices and vendor bills, not only at close. They attach the day you bill someone or enter a bill, because that is when the due date and any discount window get set. Mix this up with the invoice itself and you treat the paper as the rule; the invoice is the source document, and terms are the conditions it carries. Ignore those conditions and you miss a cash discount, pay late, or leave a leftover on aging that is not collectible. Match the terms field on the invoice or bill to the paper, then pay or collect against those dates.
Further reading
Compare this term with reference material from other accounting and finance websites.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
Expense ManagementThe 10 Best Expense Management Software for Small BusinessWe ranked the 10 best expense management tools for small business, scored on features, ease of use, and value, with honest tradeoffs for each.Updated August 8, 2026Frequently asked questions
What is Terms in bookkeeping?
Conditions of payment.
When should I use Terms?
Use Terms when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Terms?
Terms is used for terms entries, while T-Account covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.