What does it mean by Credit Terms? - Definition, Example, Explanation

[Keywords: What does it mean by credit terms? Definition. 2/10, n/30 in credit term. Credit terms 1/10, n/30 means that. What does it man by 2/10 EOM, n/30]

Definition:

Credit terms or terms of credit is the contract between sellers and buyers in which the timing and and payment amount is set which will be paid in the future.

What does it mean by credit terms?

The First part of credit term is the date and discount. 3/10, n/30 is the credit term. 3 is the rate of discount which means the first of the first part is the rate of discount. The second of the first part is the cash discount period. The first of the second part is the net amount of payment due and the second of the second part is number of the total credit period.
So we can say that
First of the first part ( Rate of discount ) / Second of the first part ( Cash discount period ),  First of the 2nd part ( Net amount ) / Second of the second part ( Total Credit Period or Time to pay total Money )

What does it mean by 2/10, n/30 in credit term?

The buyer will get 2% discount if the payment is made within 10 days of the sale. He will have to pay the money within 30 days.

Credit terms 1/10, n/30 means that:

It means the buyer will get 1% discount if the payment is made within 10 days and the buyer will have to pay the whole money within 30 days.

What does it man by 2/10 EOM, n/30?

The payer will get discount if he pays money 10 days after this month. It is common practice in business to grant one month extension if the invoice is dated on or after 26th day of the month.
For example: Date of the invoice is February 27, 3/10 EOM n/30. This means you will get discount if you pay money on 10 march which is 10 days after the month of February. You will have to pay the money in March 30.

I hope I have made it crystal clear to everyone about Credit Terms.