discounts and credit termscredit termscredit

Question

Discounts and Credit Terms

Credit Terms

Credit terms involve both the length of the credit time and the discount specified.  The terms 2/10, n/30 means that a 2 percent discount is specified if the bill is paid before the tenth day after the date of invoice or else the total amount should be paid by the 30^th day.

In assuming the credit terms to offer the firm should look at the profitability caused via longer credit and discount period or a higher rate of discount against rise cost.

Discounts

Varying the discount includes an attempt to speed up the payment of obtainable.  It can conclusion also in reduced bad debt losses.