Business-to-business transactions:

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"When, in a business-to-business transaction, a supplier gives a wholesaler cash discount payment terms such as 2 percent 30 days from date of invoice, you are calculating the payment date (by mail), is it correct to cut the check and mail your payment on the 30th day after the invoice date in order to receive your cash discount? In other words, as a business given 30 days from DOI terms, aren't I allowed the full benefit of those 30 days, regardless of whether I mail my payment, or pay by EDI, etc.?"

 

Your question is a very good one and goes straight to an issue that can cause a dilemma with vendor relations. The answer is, it really depends upon how you and the vendor have agreed to the discount terms. In other words, it is best to get the vendor to clearly state in writing if the check must be received before the 30th day or can be postmarked by the 30th day. Some vendors have a grace period with the discount and will look at the postmark date to see that it was at least mailed before the end of the discount period. Other vendors may expect payment to reach them on or before the discount date. If the vendor is significant to the company's operations and must be paid on or before the 30th day, then an EFT could be an option that still gives the company the full use of the funds until the actual last day of the discount period, while the vendor receives its funds on its due date.

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