GEM-CAR FAQ
Early suppliers payment discounts of 2% good or bad?
Early suppliers' payment discounts of 2% is an annualized return of 37%
Suppose your distributor offers a 2% discount to the shop that pays its invoices within 10 days; otherwise, the full amount is due within 30 days. This type of discount is usually called a 2%/10.30 net clause. By processing the invoice within 10 days, you give up your cash for 20 days in return for a 2% discount. This 2% return over 20 days is very high; it translates into an annualized return of 37%. Whereas a 1%/10.30 net clause offers an annualized return of 18%.
Other articles on the subject:
Applying a CAA or Other Discount to the Selling Price
Management of Specific and/or One-Time Discounts for Tires and Tire Services
Posted
4 months
ago
by
Bianca da Silveira De Amorim
#1989
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Edited
2 days
ago