Cash Discount And Its Notation

January 15th, 2009 Comments off
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I saw on my supplier invoice with a notation of “ 2/10,n/30 ” . What does this mean?

Answer:

Some companies offer their customers an incentive to get them to pay their bills faster. This is called a cash discount. See earlier article on the difference between cash discount and trade discount

When the selling company offers a cash discount, the discount will be specified on the invoice usually with a notation that reads like 2/10, n/30 which means ” 2 percent if paid within ten days; otherwise full payment expected in 30 days”

The selling company can adjusts the notation to reflect the terms it is offering like for example:

  • 1/15, n/30 – 1 percent discount if paid within 15 days; otherwise full payment is due in 30 days
  • 2/10, n/45 – 2 percent discount if paid within 10 days;otherwise full payment is due in 45 days.

 

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Financial Accounting

 
 

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