This error is a result of Discount Type not being defined in the Payment Terms Setup in GP. This needs to be defined even if the Payment Term does not calculate a discount.
Access the Payment Terms Setup in GP under Tools>>Setup>>Company>>Payment Terms
Corresponding Table: SY03300 Payment Terms Master
From the Purchase Order, click on the → from the Vendor ID to open the Purchasing Vendor
Detail Entry window. Click on the Payment Terms link. This will also open the Payment Terms