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If used properly, cash discounts improve the days-sales-outstanding aspect of a business's cash conversion cycle.

For example, a typical cash discount would be if the seller offered a 2% discount on an invoice due in 30 days if the buyer were to pay within the first 10 days of receiving the invoice.

1%/10 net 30 is a way of providing cash discounts on purchases.

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1%/10 net 30 represents the credit terms and payment requirements outlined by a seller.

The vendor may offer incentives to pay early to accelerate the inflow of cash.

Payment terms are used by the JD Edwards Enterprise One Accounts Payable and Accounts Receivable systems to specify a payment due date and, optionally, a discount percent and discount due date.

Payment terms enable you to enter invoices and vouchers more efficiently because the system calculates the due dates and discounts for you.

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You can specify a default payment term on the customer and supplier records.

Then, when you enter a voucher or invoice for that customer or supplier, you can either accept the default value or override it with a different payment term.

This figure will indicate the total percentage discount on the invoice prior to shipping or taxes that may be discounted upon early payment.

The second number is the always the number of days of the discount period.

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