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when offered terms on 2/10, net 30, Young Brand has always taken the discount, does this...

when offered terms on 2/10, net 30, Young Brand has always taken the discount, does this makes financial sense?

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Expert Solution

Answer: Terms on 2/10, net 30 discount means if buyer makes the payment in 10 days of the date of the invoice that was due to pay within 30 days, then 2% discount will be given.

For example if A sold goods to B worth $1000 and A said to B that he has to make the payment within 30 days however if he makes the full payment within 10 days, he will get a discount of 2% on the total amount that is $1000 * 20% = $20

So if B pays within 10 days, he can take a discount of $20 and pay just $980.

Yes this makes financial sense and it is a win-win situation for both; Buyer and seller. Seller gets payment early and that cash he can utilize to buy raw material or other manufactured products while buyer gets the discount on the total payment.

jeff jeffy answered 2 years ago
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