Help me understand invoice pricing

Business & Finance
Tutor: None Selected Time limit: 1 Day

You receive a 5,250 invoice dated 4/15/6, invoice including a $250 freight. Terms are 4/10, 3/30, n/60. If you pay the invoice on April27th, what will it pay? If you pay it on May 21, what will it pay? I don't understand the pay periods and how they affect the price.

Oct 11th, 2015

Thank you for the opportunity to help you with your question!

Term 4/10 means that if you pay within 10 days (from date of invoice), you will get 4% discount on the payment

Term 3/30 means that if you pay within 30 days (from date of invoice), you will get 3% discount on the payment

And,

Term n/60 means that if you don't pay in full either within 10 days or within 30 days then you MUST pay in full within 60 days.

Now, these are the terms provided by the supplier or seller and not by the courier company. Thus freight charges needs to be separated.

Total invoice amount = $5250

Freight charges = $250

Net payable to the supplier = $5000 (5250-250)

Date of invoice is 15th April

a. If you pay on 27th April, you are paying on 12th day. Thus you will get 3% discount

so, payable amount = $5000 * 97% = $4850

b. If you pay on 21st May, you are paying after 30 days but within 60 days. Thus you will have to pay in full

Payable amount = $5000


Please let me know if you need any clarification. I'm always happy to answer your questions. Kindly best this answer if it has helped you.
Oct 11th, 2015

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