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Payment Terms Examples

Payment terms are the conditions under which a vendor completes a sale. The payment terms cover:

  • When payment is expected
  • Any conditions on that payment
  • Any discounts the buyer will receive

Payment terms can apply to any party in the sale, from the wholesaler to the individual consumer.

 

Common Invoice Payment Terms

  • PIA – Payment in advance
  • Net 7 – Payment seven days after invoice date
  • Net 10 – Payment ten days after invoice date
  • Net 30 – Payment 30 days after invoice date
  • Net 60 – Payment 60 days after invoice date
  • Net 90 – Payment 90 days after invoice date
  • EOM – End of month
  • 21 MFI – 21st of the month following invoice date
  • 1% 10 Net 30 – 1% discount if payment received within ten days otherwise payment 30 days after invoice date
  • COD – Cash on delivery
  • Cash account – Account conducted on a cash basis, no credit
  • Letter of credit – A documentary credit confirmed by a bank, often used for export
  • Bill of exchange – A promise to pay at a later date, usually supported by a bank
  • CND – Cash next delivery
  • CBS – Cash before shipment
  • CIA – Cash in advance
  • CWO – Cash with order
  • 1MD – Monthly credit payment of a full month’s supply
  • 2MD – Monthly credit payment of a full month’s supply plus an extra calendar month
  • Contra – Payment from the customer offset against the value of supplies purchased from the customer
  • Stage payment – Payment of agreed amounts at stage

Discount Payment Terms

  • Accumulation discounts – Discounts for large purchases
  • Coupons – These have certain terms, such as a certain quantity has to be purchased or if the customer is past a certain age
  • Disability discount – Offer to customers with a disability
  • Discount card – Issuing cards that give certain customers or any customer a discount
  • Educational or student discount – Usually given to students, but may go to educators
  • Employee discount – Offered to employees
  • Forward dating – Moving the invoice date forward so that the payment is made after receipt of goods
  • Military discount – Offered to members of the military and family members
  • Partial payment discount – When a seller needs cash flow, he may offer a partial discount
  • Preferred payment method discount – Some retailers give customers a lower price if they pay with cash. This saves the fee the retailer pays on credit cards.
  • Prompt payment discount – The wholesaler or manufacturer gives a discount to the retailer at the list price or catalogue price. This sometimes applies to promotions.
  • Rebates – A refund mailed to the purchaser after a purchase
  • Sliding scale – This discount is calculated on a person’s ability to pay. This is common with non-profit organizations.
  • Seasonal discount – Usually this is given during a slack period when sales are down.
  • Toddler discount, child discount, or kid discount – This covers free or discounted prices for children under a certain age. There is usually a requirement that an adult pay full price.
  • Trade discount – Payments for functions such as shelf stocking, warehousing or shipping
  • Trade-in credit – A discount for something that is returned

These examples of payment terms show the wide variety of terms that can be offered by the vendor.

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