All 22 Credit Control questions
More in Credit Control
What is credit control? What is a credit limit and how is it set? What is a credit application and why is it used? What is the difference between credit control and collections? What is the purpose of a credit check before accepting a new customer? How do you assess a customer's creditworthiness? What is a credit hold and when is it applied? How do credit terms influence sales and cash flow? What is the order-to-cash cycle and where does credit control fit? How is credit exposure monitored on an ongoing basis?
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Accounts Payable & Receivable › Credit Control

What are common credit terms and what do they mean?

Beginner

Answer

Common terms include Net 30/60/90 (full payment due in that many days), Cash on Delivery (COD), Cash in Advance (prepayment), Net EOM (due end of month following invoice), and discount terms like 2/10 Net 30. Terms set the credit period and any early-pay incentive, balancing competitiveness with cash and risk.
Real-world example A risky new customer starts on COD, graduating to Net 30 after establishing a reliable payment record.

Common follow-ups: What does Net EOM mean? | How do terms reflect customer risk?

Payment Runs Collections & Bad Debts Credit Control
All 22 Credit Control questions