DEFINITION of '1%/10 net 30'
A way of providing cash discounts on purchases. It means that if the bill is paid within 10 days, there is a 1% discount. Otherwise, the total amount is due within 30 days.
For example, if "$1000 1/10 net 30" is written on a bill, the buyer can take a 1% discount ($1000 x .01 = $10) and make a payment of $990 within 10 days, or pay the entire $1000 within 30 days.
INVESTOPEDIA EXPLAINS '1%/10 net 30'
Manufacturers offer discounts like this to encourage retailers to pay quickly.
This calculation is the same regardless of what discount is used. For example "2/10 net 30" just means there is a 2% discount.
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