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When creating your invoice payment terms, bear in mind that if you have clear, concise and consistent payment terms, it is more likely that your invoice will be paid in time and this will have a positive impact on your business cashflow.

For further information on contract terms and conditions see setting terms and conditions and credit checking your customers and setting credit limits.

These terms may also be referred to in a variety of terms: 2/10 n 45, 2/10 n 60, 2/10 days net 30, 2 percent 10 net 30 days.

If paid within 10 days: $10,000 X 98% = $9,800 due with in 10 days If paid within 30 days: $10,000 is due By using the 2/10 net 30 principle, you can greatly improve your cash flow capabilities.

Download the 25 Ways To Improve Cash Flow to find other ways to improve your cash flow within 24 hours.

Vendors may or may not have a late payment penalty for such customers.

It is up to the discretion of the purchaser to decide the best method of closing accounts payable when 2/10 n 30 is available.

Access your Cash Flow Tuneup Execution Plan in SCFO Lab.

This tool enables you to quantify the cash unlocked in your company. 2/10 n 30 journal entries vary depending on the accounting method used.LIFO vs FIFO, accounting vs economic income, and many other matters make 2/10 n 30 accounting somewhat complicated.A business that offers a 2/10 net 30 discount is expressing that it is more important to have cash as quickly as possible than it is to have the full amount of their payable.The fact that lack of cash is one of the main reasons businesses fail makes these terms commonplace.The purpose of this is to shorten accounts receivable cycles for those who provide credit terms.

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