What does 2/10 net 30 mean?
Terms offering a 2% discount if the invoice is paid within 10 days; otherwise the full amount is due in 30 days.
The buyer who takes the discount pays 98% twenty days early. Giving up 2% to wait 20 days is expensive money: 2/98 × 365/20 ≈ 37.2% a year, which is why finance teams with cash usually take these discounts and why sellers use them sparingly.
Write the discount deadline and amount on the invoice so there is no argument about what was due when.
Example: $5,000 invoice on 2/10 net 30: pay $4,900 by day 10, or $5,000 by day 30.
Related terms
- Net 30Payment terms meaning the full invoice amount is due 30 days after the invoice date.
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