What are '2/10 Net 30' Payment Terms?
Updated: Oct 29, 2020
Net 30 is a form of trade credit that allows customers to pay for items or services up to 30 days after being billed. These payment terms can be used as a negotiation tool to make your business transactions even smoother.
The benefit of offering this form of credit is that it increases your pool of prospective clients significantly. It allows customers with tight cash flows flexibility; and is attractive to finance-savvy customers that are looking to shorten their cash conversion cycle to increase liquidity.
It's recommended to extend this option to your customers if you have the cash flow to do so, especially if it is generally accepted practice in your industry.
To extend this flexibility to your clients and prioritize your own liquidity, pair net 30 terms with a discount to make it more enticing for customers to pay you sooner rather than later. '2/10, net 30' is a designation referring to a commonly used spin on net 30 terms, which includes a 2% discount if paid within 10 days.