2/10/EOM, n/60—means a buyer who pays by the 10th of the month following the month of purchase may deduct a 2% discount from the invoice price. If payment is not made within the discount period, the entire invoice price is due 60 days from the invoice date.

What does terms 2/15 N EOM mean?

Some variations of the cash discount terms, among others, may be 2/15, n/30 (2% discount for the payment within 15 days and the full amount to be paid within 30 days) or n/10 EOM (the invoice is due and payable 10 days after the end of the month in which the sale occurred).

What is the main reason for cash discounts?

Cash discounts are deductions that aim to motivate customers to pay their bills within a certain time frame. A cash discount gives a seller access to her cash sooner than if she didnt offer the discount.

What is the treatment of cash discount?

To record a payment from the buyer to the seller that involves a cash discount, debit the cash account for the amount paid, debit a sales discounts expense account for the amount of the discount, and credit the account receivable account for the full amount of the invoice being paid.

What does 30 EOM mean?

30 end of the month Net 30 end of the month (EOM) means that the payment is due 30 days after the end of the month in which you sent the invoice. For example, if you and your client agree to net 30 EOM and you invoice them on May 11th, that payment will be due on June 30th—in other words, 30 days after May 31st.