Payment Terms Examples

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

Man paying pizza delivery man as payment terms examples Man paying pizza delivery man as payment terms examples
  • 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.

Advertisement

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.