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 the above would be in the intended direction.

Question

Quizplus · Accepted Answer

By changing the payment term to 3/10, net 30, the wholesaler is shortening the amount of time customers have to pay, which would result in quicker cash flow and less risk of default. This would also incentivize customers to pay earlier in order to take advantage of the discount, which would further improve cash flow. None of the other options (A, B, and C) address the issue of wanting to tighten payment terms due to rising interest rates.

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