Which range best represents a typical prompt-payment discount offered by suppliers?

Which range best represents a typical prompt-payment discount offered by suppliers?

• A. 0%
• B. 1-2%
• C. 3-4%
• D. 5-6%

Answer: (B)

Prompt-payment discounts are small incentives for paying invoices earlier than the due date, helping suppliers improve cash flow. The most common amount offered is around 1% to 2% if payment is made within a short window (often about 10 days). That’s why the 1-2% range fits best: it reflects standard early-pay terms like 2/10 net 30, where a 2% discount is available if paid in 10 days, otherwise the net amount is due in 30 days. Larger discounts such as 3-4% or 5-6% are less typical in everyday supplier terms because they cut more into the supplier’s margin, while 0% would mean no incentive at all. In short, 1-2% captures the standard practice for prompt-payment discounts.

Prompt-payment discounts are small incentives for paying invoices earlier than the due date, helping suppliers improve cash flow. The most common amount offered is around 1% to 2% if payment is made within a short window (often about 10 days). That’s why the 1-2% range fits best: it reflects standard early-pay terms like 2/10 net 30, where a 2% discount is available if paid in 10 days, otherwise the net amount is due in 30 days. Larger discounts such as 3-4% or 5-6% are less typical in everyday supplier terms because they cut more into the supplier’s margin, while 0% would mean no incentive at all. In short, 1-2% captures the standard practice for prompt-payment discounts.