|
|
|
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
|
|
|
It is common for vendors to offer discounts to encourage prompt payment. When deciding whether to take a payment discount, consider your availability of cash and if the merchandise is in and received.
Cash Discounts
Cash discounts are a percentage deduction from the invoice cost before shipping. They are noted as "X/Y/net Z" where:
| X = | percentage discount available |
| Y = | number of days from the invoice date that payment is due in order to receive the discount |
| Z = | standard time within which the invoice must be paid in full |
An invoice for $1,000 is dated 7/1/99 with terms of 5/10/net 30.
|
Variable Discounts
To encourage early payment for goods, vendors sometimes offer a sliding scale of discounts called "variable discounts." Variable discounts are calculated as a percentage that is deducted from the invoice cost before shipping. The earlier the store makes payment on the goods, the greater the discount. These discounts are noted as "X1/Y1/X2/Y2/X3/Y3/..." where:
| X1 = | percentage discount available |
| Y1 = | number of days from the invoice date that payment is due in order to receive the X1 discount |
| X2 = | percentage discount available |
| Y2 = | number of days from the invoice date that payment is due in order to receive the X2 discount |
| X3 = | percentage discount available |
| Y3 = | number of days from the invoice date that payment is due in order to receive the X3 discount |
An invoice for $2,500 is dated 5/1/00 with terms of 5/30/4/60/3/90.
|
End-of-Month Dating
End-of-Month dating indicates that a percentage deduction from the invoice cost before shipping is available beginning the last day of the month for which the invoice is dated. This is noted as "X/Y E.O.M." where:
| X = | percentage discount available |
| Y = | number of days from the last day of the month in which the invoice is dated that payment is due in order to receive the discount |
An invoice for $3,250 is dated 7/2/00 with terms of 2/10 E.O.M.
|
|