# 2/10 Net 30 Article byVishal Garg ## What is 2/10 Net 30?

The term 2/10 net 30 means the supplier or seller will give additional 2% discount to the purchaser if the purchaser pays the due amount within 10 days from the date of purchase of goods instead of taking full credit period of 30 days. For example, if someone has purchased goods costing \$100 from a store then he has to pay only \$98 if paid within 10 days of purchase otherwise \$100 will be paid within a total period of 30 days.

In other words, it can be generally seen that the supplier gives some to the purchaser to pay the dues, so to recover those dues earlier, this scheme came into light, and the supplier offers an additional 2% discount to the purchaser for early payment of dues.

### How to Calculate 2/10 Net 30?

Step 1: Calculate the total amount of receivables on which we want to calculate the amount of discount to be given.

Step 2: Calculate the amount of discount to be given using the below-mentioned formula if the payment is made within 10 days by the purchaser:

Discount = Total Amount of Receivables * Percentage of Discount, i.e., 2%

Step 3: Finally, the formula for 2/10 net 30 is as follows:

Amount to be received if paid within 10 days = Total amount of receivables calculated in step 1 above – the amount of discount to be given as calculated in step 2 above. Mathematically it is represented as:

2/10 Net 30 = Total Receivables – Total Discount

For eg:
Source: 2/10 Net 30 (wallstreetmojo.com)

### Examples of 2/10 net 30

You can download this 2/10 Net 30 Excel Template here – 2/10 Net 30 Excel Template

#### Example #1

ABC Inc. has sold material costing \$100,000 on 2/10 net 30 on 01.04.2020 to Mr. X. Now, ABC Inc wants to know the difference in the number of receivables in both the situations, i.e., exercising the option of payment within 10 days and not exercising the option of early payment discount. The calculation of both the cases using the steps mentioned above is as follows:

Solution:

Step 1: Calculate the total amount of receivables, i.e., Cost of Material of \$100,000.

Step 2: Calculate the amount of discount if the payment is made within 10 days by the purchaser:

Discount = 100000 * 2 = 2000

Step 3: Amount to be received if paid within 10 days:

• = \$(100,000 less 2% of 100,000)
• = \$(100,000 – 2,000)
• = \$98,000

In case a full credit period of 30 days is utilized by the purchaser, then the purchaser has to pay \$100,000 within 30 days from the date of purchase to the entity.

#### Example #2

PQR Inc. has sold material costing \$1,500,000, other goods costing \$532,500, and some other amounts of receivables of \$1,117,500 are also due on 2/10 net 30 on 01.10.2020 to RST Inc. Now, PQR Inc wants to know the difference in the number of receivables in both the situations, i.e., exercising the option of payment within 10 days and not exercising the option of early payment discount.

Solution:

The calculation of both cases is as follows:

Step 1: Calculate the total amount of receivables i.e.

• Cost of Material of \$1,500,000
• Other Goods of \$532,500
• Other Receivables of \$1,117,500
• Total Receivables = \$(1,500,000 + 532,500 + 1,117,500)=\$3,150,000

Step 2: Calculating the amount of discount if the payment is made within 10 days by the purchaser:

Discount = 3,150,000 * 2 = 63,000.

Step 3: Amount to be received if paid within 10 days:

• = Total Receivables – Total Discount
• = 3,150,000 – 63,000
• = \$3,087,000.

### Difference between 2/10 Net 30 and Net 30

• In 2/10 net 30, the purchaser has been provided with an option to pay within 10 days and enjoy an additional 2% discount, but on the other hand, there is no such privilege in the Net 30 concept.
• The concept of Net 30 is used by established and renowned organizations who do has a fear of losing customers, but on the other hand, the additional advantage of 2% is provided with the sake of increasing customer base.

• The liquid funds of the business are available with the entity for a longer period so that the requirement of may easily be managed.
• The entity can also invest and earn short term returns thereupon if in the situation of.
• It helps in setting new credit standards to the industry in which an entity operates.