diff --git a/erpnext/accounts/party.py b/erpnext/accounts/party.py
index b6eb3edbda..01cfb58dec 100644
--- a/erpnext/accounts/party.py
+++ b/erpnext/accounts/party.py
@@ -550,7 +550,7 @@ def get_due_date_from_template(template_name, posting_date, bill_date):
 		elif term.due_date_based_on == "Day(s) after the end of the invoice month":
 			due_date = max(due_date, add_days(get_last_day(due_date), term.credit_days))
 		else:
-			due_date = max(due_date, add_months(get_last_day(due_date), term.credit_months))
+			due_date = max(due_date, get_last_day(add_months(due_date, term.credit_months)))
 	return due_date
 
 
diff --git a/erpnext/buying/doctype/purchase_order/test_purchase_order.py b/erpnext/buying/doctype/purchase_order/test_purchase_order.py
index f0360b27dc..920486a78e 100644
--- a/erpnext/buying/doctype/purchase_order/test_purchase_order.py
+++ b/erpnext/buying/doctype/purchase_order/test_purchase_order.py
@@ -10,6 +10,7 @@ from frappe.utils import add_days, flt, getdate, nowdate
 from frappe.utils.data import today
 
 from erpnext.accounts.doctype.payment_entry.payment_entry import get_payment_entry
+from erpnext.accounts.party import get_due_date_from_template
 from erpnext.buying.doctype.purchase_order.purchase_order import make_inter_company_sales_order
 from erpnext.buying.doctype.purchase_order.purchase_order import (
 	make_purchase_invoice as make_pi_from_po,
@@ -685,6 +686,12 @@ class TestPurchaseOrder(FrappeTestCase):
 			else:
 				raise Exception
 
+	def test_default_payment_terms(self):
+		due_date = get_due_date_from_template(
+			"_Test Payment Term Template 1", "2023-02-03", None
+		).strftime("%Y-%m-%d")
+		self.assertEqual(due_date, "2023-03-31")
+
 	def test_terms_are_not_copied_if_automatically_fetch_payment_terms_is_unchecked(self):
 		po = create_purchase_order(do_not_save=1)
 		po.payment_terms_template = "_Test Payment Term Template"