We are not aware of a listing of vendor terms that authoritatively documents the meanings of terminology used by vendors. The following are terminology indicated by other TAPN members.
- Due upon receipt
- COD (cash on delivery)
- CIA (cash in advance)
- Net 30 days – meaning payment is due in 30 days
- Net 15 days
- Net 60 days
- Net 10th prox (or Net 15th prox, etc.) – see above question & answer
- 1% 10 days, Net 30 days (meaning you get a 1% discount off the invoice amount if you pay within 10 days, but you have 30 days to pay the full invoice value; some vendors also use 15 days for the discount period)
- 2% 10 days, Net 30 days (some also use 15 days for the discount period)
- 3% 10 days, Net 30 days
- 5% 10 days, Net 30 days
There are also special vendor terms depending upon the industry and its standard practices. You may also have arrangements based on the volume of purchases, order cycle, or type of material/service ordered with a vendor. One member has an arrangement where they get a discount if an invoice is paid in the 1st month, 2nd month or 3rd month and then in the 4th month they owe the full amount. The discount in months 1 to 3 is a decreasing sliding scale. This is obviously a special arrangement with their vendor.
A key issue, and perhaps this is behind your question, is how the terms are applied (defined). I.e., is the number of days based on the ship date, invoice date, or received date? The answer will depend on your specific arrangement with a vendor or your company's business practices. Obviously it is necessary to come to agreement with your vendors as to which of these possible definitions you use. Much will depend on the relative size and strength (or determination of your management in setting company policy) of your company and of your vendor companies as to whose definition will stand. You want to clearly document the definition as part of your policies, which you should communicate up front to vendors. Use a vendor welcome letter to deliver a package detailing your policies and procedures. If you are in discussions with existing vendors and you prevail, document and issue to them the agreed definition of terms.