Payment Terms - Explained

The video tutorial explains various payment terms commonly found on invoices, such as Payment in Advance (PIA), Net 30, End of Month (EOM), and Cash on Delivery (COD). It covers the conditions and implications of each term, including discounts for early payments and specific deadlines. The tutorial also discusses forward dating, accumulation discounts, partial payment discounts, rebates, and contra, providing a comprehensive understanding of how these terms affect business transactions.

What does the term 'Net 30' imply on an invoice?

• Payment is due within 30 days.

• Payment is due immediately.

• A 30% discount is applied.

• Payment is due at the end of the month.

If an invoice states 'EOM', when is the payment due?

• Immediately upon receipt.

• Within 30 days.

• At the end of the current month.

• 15 days after the invoice date.

What does 'COD' stand for in payment terms?

• Cash on Delivery

• Credit on Demand

• Cash on Discount

• Credit on Delivery

What is required for 'Cash Before Shipment' terms?

• Payment is due after goods are received.

• Payment is due at the end of the month.

• Payment must be made before goods are shipped.

• Payment is made in installments.

What does 'CIA' specify in payment terms?

• Credit in Account

• Cash in Advance

• Credit in Advance

• Cash in Account

How does an accumulation discount work?

• Discount based on the size of the order.

• Discount for delayed payment.

• Discount for early payment.

• Discount for cash payment.

What is a rebate in the context of payment terms?

• A fee for processing the order.

• A return of a portion of the purchase price.

• An upfront payment discount.

• A penalty for late payment.