I don't know what you mean by "I set the preference master to custom and invoice classification." If a preference isn't working, one of the possibilities is that the version of order entry being used doesn't have a 1 in processing option 70 (A9.1), or whichever one says to use preference profile defaults. Also, whichever processing option it is that specifies what version of P40400 to use - 56 in my version - must point to a version that has a 1 beside the payment terms preference.
In the hierarchy, make sure you have customer group selected for Sold To or Ship To, whichever is appropriate in your case.
If in the preference master you have enabled effective dates or quantities, make sure your order is inside these parameters.
Also, if you have enabled effective quantities, your preference must be set up in the unit of measure that is entered on the sales order, I believe. This is a pain in the back, because you have to set up each preference in EA, CA, BX, whatever.
It is sometimes hard to troubleshoot a preference. Good luck.