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Payment Terms
Early Payment Discount
Definition
A percentage discount offered for paying an invoice before the due date.
Overview
Early payment discounts incentivize faster payment. Common terms like '2/10 Net 30' mean a 2% discount if paid within 10 days, otherwise full amount due in 30 days.
Example
2/10 Net 30 on a $10,000 invoice means the client can pay $9,800 if paid within 10 days.
Best Practices
Offer when cash flow is important. Clearly state the discount percentage and deadline.
Common Mistakes to Avoid
Discount too small to motivate
Unclear terms
Not honoring discounts
Frequently Asked Questions
What's a typical early payment discount?
1-3% is common. 2/10 Net 30 is a widely used standard.