Understanding Invoice Discount Example for Enterprises

On invoice discount example for enterprises

in business cash discounts are offered to encourage prompt payments extra dating is one of the methods used for cash discounts it is typically written in one of these three ways this is read as 3 10 50 extra the first number is a percent discount in this case three percent the second number is a date range for the discount so in this case 10 days and the third number is an additional range for the discount an extra lets the person know that there are extra days for the discount and what this is saying is that a three percent cash discount may be taken if payment is made within 10 plus 50 days from the date of the invoice as an example let's say that an invoice is dated March 22nd with the terms 3 10 50 extra and the orders for one thousand dollars the discount date will be ten plus fifty so sixty days from March 22nd the date of the invoice there are 31 days in March 31 minus 22 equals nine so so that's nine days of the 60 days next we go to April there are 30 days in April which brings us to 39 days and in order to get to 60 days we need 60 minus 39 so 21 days in May so the discount date is 5 21 May 21st and the discount will be 3 percent of one thousand dollars thirty dollars so 970 dollars will be due on May 21st for the discount and one note with no net payment date is given it's common practice to allow 20 days after the last discount date so in this example one thousand dollars the full invoice amount would be due on June 10th because 10 days remain in May after the discount date and to get the 20 days we need to go 10 days into June which gives us a due date of June 10th all right my friends hopefully you got something out of this video I do have shh more videos right there for you till next time I am out of here