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4) The discount rate offered:

Refers to the discount rate that can be given to customers to encourage

them to pay quickly.

Credit terms will be given to the customer to identify any discounts that
may be offered to encourage early payment within a certain period
and this is known as the credit period. This term involves three

conditions, namely:

i. Term/period of credit
ii. Total cash discount for early payment
iii. Term/period discount

Credit terms are usually written as "a/b net c". This means customers
can reduce “a” percentage of payment from the invoice if payment is

made within “b” days (discount period) if not, payment should be
settled within “c” days (the credit).

Example:

With the credit terms of "3/10 net 30" and the invoice price of
RM500,000 on July 1, customers will only have to pay a total of
RM485,000 if they pay on or before July 11. [RM500,000 (1-0.03)].

But if the customer does not take the discount, a full payment must be
done no later than July 31.