Delivery and payment

Payment terms are the conditions under which a vendor completes a sale. The payment terms cover:

Man paying pizza delivery man as payment terms examples

When payment is expected
Any conditions on that payment
Any discounts the buyer will receive

Payment terms can apply to any party in the sale, from the wholesaler to the individual consumer.

Common Invoice Payment Terms

PIA – Payment in advance
Net 7 – Payment seven days after invoice date
Net 10 – Payment ten days after invoice date
Net 30 – Payment 30 days after invoice date
Net 60 – Payment 60 days after invoice date
Net 90 – Payment 90 days after invoice date
EOM – End of month
21 MFI – 21st of the month following invoice date
1% 10 Net 30 – 1% discount if payment received within ten days otherwise payment 30 days after invoice date
COD – Cash on delivery
Cash account – Account conducted on a cash basis, no credit
Letter of credit – A documentary credit confirmed by a bank, often used for export
Bill of exchange – A promise to pay at a later date, usually supported by a bank
CND – Cash next delivery
CBS – Cash before shipment
CIA – Cash in advance
CWO – Cash with order
1MD – Monthly credit payment of a full month’s supply
2MD – Monthly credit payment of a full month’s supply plus an extra calendar month
Contra – Payment from the customer offset against the value of supplies purchased from the customer
Stage payment – Payment of agreed amounts at stage

Discount Payment Terms

Accumulation discounts – Discounts for large purchases
Coupons – These have certain terms, such as a certain quantity has to be purchased or if the customer is past a certain age
Disability discount – Offer to customers with a disability
Discount card – Issuing cards that give certain customers or any customer a discount
Educational or student discount – Usually given to students, but may go to educators
Employee discount – Offered to employees
Forward dating – Moving the invoice date forward so that the payment is made after receipt of goods
Military discount – Offered to members of the military and family members
Partial payment discount – When a seller needs cash flow, he may offer a partial discount
Preferred payment method discount – Some retailers give customers a lower price if they pay with cash. This saves the fee the retailer pays on credit cards.
Prompt payment discount – The wholesaler or manufacturer gives a discount to the retailer at the list price or catalogue price. This sometimes applies to promotions.
Rebates – A refund mailed to the purchaser after a purchase
Sliding scale – This discount is calculated on a person’s ability to pay. This is common with non-profit organizations.
Seasonal discount – Usually this is given during a slack period when sales are down.
Toddler discount, child discount, or kid discount – This covers free or discounted prices for children under a certain age. There is usually a requirement that an adult pay full price.
Trade discount – Payments for functions such as shelf stocking, warehousing or shipping
Trade-in credit – A discount for something that is returned

These examples of payment terms show the wide variety of terms that can be offered by the vendor.