Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

In payment term what does it mean on this term? 2%/10, net 60

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.

user-image
Question added by Jocelyn Perena , Procurment Lead And Governance , CPP, CPPM Certified , Agthia Group
Date Posted: 2017/07/24
muhammad nahar
by muhammad nahar , Procurement Executive , Mutiara International Grammar School

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. 

Mohamed  Moustafa Saber
by Mohamed Moustafa Saber , Senior Budget Analyst , Midar for Investment and Urban Development

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

Saeed Zaman
by Saeed Zaman , Senior Finance Executive , Universal Engineering Services

Its mean 2 percent of interest will be liable of the total amount after the payment period of 60 days..

Yusef Shafei
by Yusef Shafei , Technical Support Manager , ASIYA CONSULTING & ENGINEERING SYSTEMS MANAGEMENT

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.

Mohammed Awad
by Mohammed Awad , Regional Supply Chain & Operations Director , Tamakkon Co.

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%

Jocelyn Perena
by Jocelyn Perena , Procurment Lead And Governance , CPP, CPPM Certified , Agthia Group

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.

More Questions Like This