“1%/10 net 30” is a credit term used in business-to-business transactions to provide a discount incentive for early payment by the buyer. Let’s break down the components of this credit term:

1. **1% Discount:** The first part, “1%,” indicates the percentage of the invoice amount that the buyer can deduct or discount if they pay the invoice early. In this case, the buyer can take a 1% discount on the total invoice amount.

2. **10 Days:** The “10” in “1%/10” specifies the number of days within which the buyer is eligible to take advantage of the early payment discount. In this example, the buyer must pay the invoice within 10 days of the invoice date to qualify for the 1% discount.

3. **Net 30:** The term “net 30” designates the maximum credit terms. It means that the buyer is expected to pay the full invoice amount within 30 days of the invoice date if they don’t take advantage of the early payment discount.

Putting it all together, “1%/10 net 30” means that the buyer can take a 1% discount on the invoice total if they pay the bill within 10 days. If they choose not to take advantage of the early payment discount, the full invoice amount is due within 30 days.

This type of credit term is a common practice in commercial transactions and is used to encourage prompt payment by providing a financial incentive for early settlement of invoices. It benefits the seller by improving cash flow and reducing the risk of late payments, and it benefits the buyer by allowing them to save money through the early payment discount.