Скачать или смотреть What Is The Ordinary Dating Method For Cash Discounts Explained -How To Determine Discount Due Dates

In this video we discuss, in business, the ordinary dating method for cash discounts. We cover how to calculate discounts and how to compute the due date for the discount and for the invoice.

Transcript/notes
In business, cash discounts are offered to encourage prompt payments. The ordinary dating method is the most common method used for cash discounts.

It is typically written on an invoice as something like this. (3/10, n/30). This is read as 3, 10, net 30. The first number is a percent discount, the second number is a date range, so in this case, 10 days, and net 30 is again a date range, so in this case 30 days.

And what this is saying is that if the invoice is paid within 10 days from the invoice date, there will be a 3% discount, and if it is not paid within 10 days, the full invoice amount must be paid within 30 days from the invoice date.

As a quick example, let’s say that an invoice for $420, states 2/10, n/30. So, if the invoice is paid within 10 days from the invoice, there is a 2% cash discount. 2% of $420 is .02 times 420, which equals $8.40. In this case the amount due would be the invoice amount minus the cash discount, $420 minus $8.40, which equals $411.16.

And, if the invoice is not paid within 10 days from the invoice date, the total amount of the invoice, $420 will be due within 30 days from the invoice date.

What can get confusing for some is figuring out the actual due dates, so let’s go through this. We will use the numbers from the previous example, invoice for $420, and 2/10, n/30, with an invoice date of 10/6.

For the date, for the discount, 10 days from the invoice date. We do not include the actual date of the invoice, the 6th, in our example. Here is a calendar counting the days from the invoice date, which is the 16th. To compute this date, we just add 10 to the invoice date, so 6 plus 10, which equals 16, so the 16th.

Now for the due date of 30 days of the invoice date. To calculate this, we subtract the invoice date from the number of days in the month, then add the number of days in the next month needed to get to 30.

Using our example of 10/6. There are 31 days in October, so we have 31 minus 6, which equals 25. To get to 30, we need to add 5 to 25, so, 5 days in the next month of November, and the due date for 30 days is from 10/6 is 11/5, November 5th.

And here is another more complex example for cash discounts and determining the due dates for the discount and actual due dates.

Timestamps
0:00 What is the ordinary dating method for cash discounts in business?
0:28 Terms of ordinary dating method explained
0:42 Example of ordinary dating method for cash discounts
1:24 Finding discount due dates
2:03 Calculating 30 days from invoice date
2:39 More complex example of ordinary dating method for cash discounts in business