When you are setting up a new business, or even if you are just trying to get a handle on the finances of an existing one, it is important to understand the different payment terms that may be used. Here is a rundown of some of the most common payment terms and what they mean:
Net 30: This means that the invoice is due 30 days after it is issued.
2/10 Net 30: This means that the buyer has 2% discount if they pay within 10 days, but otherwise the full amount is due within 30 days.
COD (Cash on Delivery): The buyer pays for the goods when they are delivered.
Prepayment: The buyer pays for the goods before they are delivered.