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This is one of the payment term used in purchasing goods or selling good. It helps cash flow and reduce credit. This are not commonly used in alot of companies.
It means that if the bill is paid within 10 days, there is a 2% discount. Otherwise, the total amount is due within 60 days.
2/10 net 30 means a discount for payment within 10 days. The purpose of this is to shorten accounts receivable cycles for those who provide credit terms. This is essential when vendors have accounts receivable turnover cycles which exist longer than preferred. A business that offers a 2/10 net 30 discount is expressing that it is more important to have cash as quickly as possible than it is to have the full amount of their payable. The fact that lack of cash is one of the main reasons businesses fail makes these terms commonplace. Businesses love to offer 2/10 net 30 for 2 reasons: it makes customers happy while speeding up cash cycles
Its mean 2 percent of interest will be liable of the total amount after the payment period of 60 days..
If you pay the money back in 10 days you will recieve the 2% precent discount, if you do not you will have to settle the full amount within 60 days.
It needs a bit of a clculation where you will need to take 2% of the first 10% advance payment and minus it from the 60%
An applicable 2% discount if payment made within 10days otherwise normal payment term will be applied which is 60days term. This weill reduce accounts receivable in long term basis and assist cash flow.
