UNDERSTAND INVOICE TERMS
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You may have seen various invoice terms to choose from when you create an invoice. But what do they mean? How do you decide which one to choose?
This article answers these questions. We’ll explain each option in the image above, starting at the top.
* 1% 10 Net 30 or 2% 10 Net 30: Both of these options offer a percent discount for early payment.
For example, “1% 10 Net 30” means there’s a 1 percent discount for an invoice paid within ten days, otherwise the entire invoice is owed within 30 days. “2% 10 Net 30” means there’s a 2 percent discount for an invoice paid within ten days, or the entire invoice is owed within 30 days.
* Consignment: An agreement to pay a person or company for goods, once the goods are sold.
* Due on receipt: This means the payment is due once the client receives the invoice.
* Net 15, Net 30, Net 60, Net 90: The number after “Net” refers to the number of days the client has to pay an invoice. For example, “Net 15” means the client has 15 days to pay their bill. “Net 30” means the client has 30 days to pay their bill. And so on.