Supplier Invoice Payment Terms

When goods or services are purchased on account from a supplier, the invoice will stipulate the supplier invoice payment terms. These payment terms indicate when an invoice is to be paid.

For example, an invoice might stipulate payment terms net 30 or n/30 terms, which means that the full amount of the invoice is due for payment 30 days from the date of the invoice. Alternatively it might specify net 60 days or n/60, which indicates the invoice is due to be paid 60 days from the invoice date.

Early Settlement Discounts

Supplier invoice payment terms often include an incentive to pay early by offering an early settlement discount if the invoice is paid before its due date.

For example, the payment terms net 30 might be combined with a 1% early settlement discount for payment within 10 days, and the invoice would then refer to payment terms 1 10 net 30 or 1/10, n/30. This means that is the invoice if paid within 10 days a discount of 1% can be deducted from the invoice value before paying, if the invoice is paid after 10 days the full amount must be paid, and in any event, the invoice must be paid within 30 days of the invoice date.

Payment Terms 1 10 net 30 Example

Suppose an invoice is issued for 2,000 and the supplier invoice payment terms are 1% 10 days, net 30 terms. If paid within 10 days a discount of 2,000 x 1% = 20 can be taken and the amount paid would be 2,000 – 20 = 1,980. If paid after 10 days then the full amount of 2,000 would have to be paid. Under the net 30 terms and conditions, the invoice must be paid within 30 days.

Multiple Step discounts

Variations in supplier invoice payment terms exist to allow for multiple step discounts. For example, net 60 terms might be expressed as 2/20, 1/30, net 60 terms, meaning that a 2% discount is available for payment within 20 days, a 1% discount is available for payment within 30 days, and the full amount must be paid within 60 days.

Other Examples of Supplier Invoice Payment Terms

Other common examples of supplier invoice payment terms are as follows:

  • 90 day payment terms terms: Full amount due within 90 days, sometimes shown as n/90.
  • Net on receipt terms: Full amount due on receipt of the goods.
  • Net EOM terms: Full amount due at the end of the month (EOM) in which the invoice was issued.
  • 3/15. n/60 terms: 3% discount for settlement in 15 days, net 60 terms meaning the full amount is due within 60 days.
  • 1/10, n/20 terms: 1% discount for settlement in 10 days, net 20 terms meaning the full amount is due within 20 days.
  • 5/10, 2/30, n/60 terms: 5% for settlement within 10 days, 2% for settlement in 11-30 days, full amount due within 60 days.
  • Net 30 EOM terms: Payment is due in full 30 days after the end of the month (EOM) in which the invoice was issued.
Supplier Invoice Payment Terms November 6th, 2016Team

You May Also Like


Related pages


hire purchase journal entriesdirect labour efficiency variance formulavoucher layoutbond amortization schedule examplewhat is the purpose of the post closing trial balanceexamples of current liabilitiesperiodic inventory system average cost methodfinancial gearing definitioncash book excel sheetgross margin equationbank loan accounting entriesoperating leverage equationfob shipping definitionis prepaid insurance a current assetallowance method of accounting for bad debtswhich of these equations shows how installment loans are calculatedcashiers check definitionaccounting inventory systemscontrollable margin formulawhat is the meaning of prepaid expensespresent value of annuity formula in excelbad debt write offsaccounting for debt factoringdefine amortisationdebt to equity equationpetty cash fund entriesrent a bookkeeperexpense accrualsafda accountingvertical profit and loss account format in excelbookkeeping t accountswhat is accrued expense payableaccounting ledger examplevariable costs are controllable and fixed costs are nota bank reconciliation should be preparedvertical analysis balance sheet examplejournalizing exampleocf calculatorcash disbursement formatbasic bookkeeping termschange in nwc formulacommon size income statement excelequity multiplier ratio formulaarr calculation formulaaccounts payable checklistprepaid expenses journal entry examplejournalizing accounting exampletypical journal entries accountingtime sheet exampledirect materials usage variancebank reconciliation statement proformaaccounting entries for purchasesaccrued wages balance sheetwip revenue recognitionwhat is accounts receivable factoringmileage claim templatecontinuous compound interest formula calculatorfv growing annuityamortization table accountingstock split journal entryexample of a prepaid expensedebit versus credit accountingstraight line method depreciation calculatorannuity npvjournal entry for expense accrualaccounting entry for deferred tax assetjournal entries in accounts payable processinventory held on consignmentannuity perpetuitywhat are the closing entries