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Bernstein Burkley
  • Practice Areas
    • Overview
    • Bankruptcy & Restructuring
    • Business and Corporate Transactions
    • Creditors’ Rights
    • Litigation
    • Oil & Gas and Energy
    • Real Estate
    • Real Estate & Commercial Finance
  • Our Attorneys
  • About Us
    • Our Approach
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Q&A
Q&A

How can I offer discount payment terms to incentivize paying the full balance?

Posted on October 29, 2012 by Bob Bernstein

Creditors’ Rights 47

Q:I have customers that send payment for some of their account balance at the beginning of each month. I’d like to offer some discount payment terms in hopes that this will provide some incentive to pay off the full balance.  What are some examples that I can include on the next invoice?

A: Discounts and terms vary from industry to industry.  Perishable goods often require terms shorter than 30 days.  Longer terms, sometimes up to 180 days, are normal in manufacturing.  Discounts rarely exceed three percent, and are excellent means of encouraging prompt payment from honest, conscientious debtors.  “Payment terms” refer to when and how the invoice is to be paid.  One is attached to the discount and is usually between 10 and 15 days.  If the bill is paid within that period, the customer is permitted to take a discount, often two percent.  If the discount period is ignored, the other time period applies and the full amount of the invoice is due, typically in 30 days.  Businesses that offer discounts usually allow the customer to calculate the amount of the discount and subtract it from their payment.

*Learn more about credit policies and collections with Bob Bernstein’s book, Get P.A.I.D.TM A Guide to Getting Paid Faster (and What to Do if You Don’t!) at www.getpaidsystem.com

 

 

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