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OPEN BOOK INSIGHT —
plan for your business growth
Trade terms — also called “terms,”
“supplier terms,” “trade credit,” “net terms,”
“purchase terms” and “payment terms” — are
an agreement between a company and its
supplier for the timing and amount of...
More
1/6
OPEN BOOK INSIGHT —
plan for your business growth
Trade terms — also called “terms,”
“supplier terms,” “trade credit,” “net terms,”
“purchase terms” and “payment terms” — are
an agreement between a company and its
supplier for the timing and amount of payments.
Common business-to-business trade terms are
“net 30” or “net 60,” meaning that a business has
30 or 60 days from the invoice date to pay in full
for the purchase.
To motivate early payment,
suppliers will sometimes offer an incentive, such
as a discount of 1% or 2%, for invoices that are
paid within 10 days.
Trade terms can make sense for industries in
which supplies, inventory or raw materials are
typically purchased and paid for over time.
These
include agriculture, automotive, construction/
contracting, electronics, health service providers,
medical equipment, manufacturing, restaurant
and retail and wholesale trade.
The deferred
payment option allows the purchasing business
more time to generate revenue, which can
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