A wholesaler has been offering his customers payment terms of 3/10, net 60. He wants to tighten his terms because interest rates have gone up. He could change his terms to:
A) 3/10, net 90.
B) 3/20, net 60.
C) 4/10, net 60.
D) 3/10, net 30.
E) None of these is a good answer.

Question

Quizplus · Accepted Answer

The wholesaler can tighten his payment terms by reducing the net payment period, and increasing the discount offered for early payment. Option D offers a 3% discount for payment within 10 days, but reduces the net payment period to 30 days. This will encourage customers to pay earlier and reduce the impact of increased interest rates on the wholesaler.

A Wholesaler Has Been Offering His Customers Payment Terms of 3/10