Overview
If your business is underwritten by Settle, you’ll be able to apply Extended Payment Terms (EPT) to qualifying invoices. When EPT is applied, Settle will pay your vendor upfront, and you’ll pay a fee to defer your payment to Settle by 30-120 days.
Applying EPT shifts financial liability from your vendor to Settle. In order to ensure your connected bookkeeping software stays up to date, we adjust your accounting ledger to reflect this shift in liability.
The EPT sync process
What Settle creates:
New Accounts: When EPT sync is enabled, Settle will add the following to your Chart of Accounts in Quickbooks:
"Settle Clearing Out" - a "cash" account, used to mark the synced Bill as paid
"Settle Loans Payable" - a currently liability account, used to represent the EPT principal amount owning to Settle.
Settle Loans Payable will be useful by default, but you can re-map this to a different liability account by going to Settings > Integrations > View Preferences
EPT Fee Invoice: An EPT fee invoice is generated within Settle to represent fees owed to Settle.
Under Integration Preferences, select an account from your Chart of Accounts to map these fees to. We suggest using an Expense type account.
EPT Loan Principal: When you use Extended Payment Terms, Settle pays your vendor upfront for a fee. The amount Settle pays to your vendor is known as the principal and will correspond to the vendor invoice amount. Principal is accounted for differently than the fee invoices above - please refer to the illustration below for a walkthrough.
Under Integration Preferences, select an account from your Chart of Accounts to map these fees to. We suggest using a Liability type account.
Turning the Sync On or Off:
The EPT sync feature can be toggled on or off under Settings > Integrations > View Preferences. The “start date” corresponds to when the checkbox was previously enabled by an Admin in your organization. It is also recommended that you designate an account to sync uncategorized invoices to prevent sync errors.
Quickbooks Integration:
Summary of events involved in EPT:
See this help doc
The following table breaks down the events involved in the EPT sync into journal entires, so that you can understand what impact each event or object has on your financials:
Step 1:
Invoice from The North Face uploaded to Settle. The invoice is due to the vendor on 1/15/2022. Invoice is synced to Xero.
Date | Account | Vendor | Amount | Object Synced to Xero |
1/1/2022 | Debit (Dr.) Office Supplies Expense | The North Face | $1,000 | Invoice |
| Credit (Cr.) Accounts Payable | The North Face | ($1,000) | Invoice |
Step 2:
You decide to extend this invoice. Settle creates a fee invoice and an invoice is synced to Xero.
Date | Account | Vendor | Amount | Object Synced to Xero |
1/15/2022 | Debit (Dr.) Interest Expense | Settle | $15 | Invoice |
| Credit (Cr.) Accounts Payable | Settle | ($15) | Invoice |
Step 3:
You pay Settle for the fee invoice created above. A Payment is synced to Xero.
Date | Account | Vendor | Amount | Object Synced to Xero |
1/15/2022 | Debit (Dr.) Accounts Payable | Settle | $15 | Payment |
| Credit (Cr.) Cash | Settle | ($15) | Payment |
Step 4:
We shift the liability from The North Face to Settle with a Payment. The original invoice from The North Face is now marked as paid, and you owe Settle the $1,000.
Date | Account | Vendor | Amount | Object Synced to Xero |
1/15/2022 | Debit (Dr.) Accounts Payable | The North Face | $1,000 | Payment |
| Credit (Cr.) Settle Loans Payable | Settle | ($1,000) | Payment |
Step 5:
Upon maturity of the EPT loan, we record the repayment made to Settle.
Date | Account | Vendor | Amount | Object Synced to Xero |
2/15/2022 | Debit (Dr.) Settle Loans Payable | Settle | $1,000 | Bank Transaction |
| Credit (Cr.) Cash | Settle | ($1,000) | Bank Transaction |