End of month dating method
As long as they are not paid, your bills' value goes down because of inflation.
Cash discounts largely depend on the terms, dating methods, **and the date of payment.
The price after any cash discounts is called the selling price.
Payment terms have a direct effect on your business cash flow and on the risk to get unpaid invoices and bad debts.
Longer they are, more the need in working capital to finance the receivables gets heavier, and more the risk to be impacted by a customer default is high.
Many suppliers and vendors give manufacturers and retailers a cash discount for paying invoices early and in cash.
Invoices are typically marked with a discount period, the net amount due, and some additional information.This means that the account customer needs only pay 97.5% of their account debt if they pay it on or before the payment period end date.If the trading terms do not include a payment incentive discount, then the trading terms will be described as "Net 30" i.e.A 2 percent discount is quite advantageous for most businesses.Companies almost always try to pay these bills early to receive the cash discount unless they are under tight cash flow restrictions. If the invoice is not paid within the first ten days to receive the discount, the balance of the invoice is due 30 days from receipt.So, an invoice raised on 15th June would be due for payment by the 15th July if the trading terms were 'due in 30 days' from invoice date, but would be due for payment in full without any discount incentive on 30 July if the trading terms were ' Net 30' from statement date.