What is Credit Period? Definition and Meaning


Credit Period means a discount facility from the seller and it's also a cash discount. I am going to give an example and it will make more sense. The writing approach of the credit period is "2/10 net 30" so 2/10 net 30 is an example of a credit period. 

It mentions that if the buyer pays all the cash to the seller they(seller) will provide a 2% discount on sale that is 2/10 and here net 30 indicating that from the date of sale buyer will have to pay all the money within 30 days from the date of sale.

 If buyers delay more than 10 days at that time they (buyer) will not get the discount offer but they will be able to pay that money within 30 days. So 2/10 net 30 means if the buyer pays all the money to the seller that time the seller will give a 2% discount on sale.

On the other hand, if they cross 10 days they will not get the opportunity of a discount but they have to pay within 30 days. It's a cash discount opportunity system. Most of the time sellers need cash money. That time they give this discount offer to the buyers, in this way buyers become happy and sellers get the current money within a short period of time.

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