How to Calculate a Sales Discount

Calculating sales discounts

In business, often one company will offer a discount to another company if the company pays its bill early. Companies express sales discounts in specific terms. These terms look like the example 2/10 n/30. This term means, if the company pays in 10 days, they receive a 2 percent discount. The full bill is due in 30 days. Once a company has these terms, it is a matter of performing simple math to determine the discount.

Instructions

1. Determine the sales terms on the invoice. For example, an invoice uses the terms 2/10, n/30 for the sale of $100,000 in widgets.

2. Determine if you qualify for the discount. In the example, the company pays eight days after the invoice date, so it will qualify for the discount.

3. Multiply the discount rate by the invoice price. In the example, 2 percent times $100,000 equals a discount of $2,000.

References

• Accounting Coach: Sales on Credit and Credit Terms