What is "2/10, net 30" payment terms?


Quick Answer

According to BusinessDictionary, the payment term 2/10, net 30 means that a two percent discount is given if the invoice is paid within 10 days. Regardless, the full balance is due 30 days after the date of the invoice.

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What is "2/10, net 30" payment terms?
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Full Answer

Companies offer this discount to receive quicker payments. According to AccountingCoach, many companies say that the two-percent boon for early payment provides too steep a discount to the buyer. Paying the bill 20 days early is the equivalent to receiving a 36-percent annual interest rate on the purchase. AccountingCoach says that certain sellers will not offer a 2/10, net 30 payment term due to the high percentage equivalents.

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