Definition: End of month, often abbreviated EOM, is an attribute used in many business credit terms to describe the due date and time payment is required. Many suppliers and vendors give manufacturers and retailers a cash discount for paying invoices early and in cash.
Example
Invoices are typically marked with a discount period, the net amount due, and some additional information. For example, an invoice that is marked 2/10, n/30 EOM lists a cash discount, net payment terms, and a specific payment date.
“2/10” refers to the cash discount. If the invoice is paid within the first ten days after receiving it, the seller will discount the order by 2 percent. This ten day window is often called the discount period. A 2 percent discount is quite advantageous for most businesses. Companies almost always try to pay these bills early to receive the cash discount unless they are under tight cash flow restrictions.
“n/30” refers to the net amount due. If the invoice is not paid within the first ten days to receive the discount, the balance of the invoice is due 30 days from receipt. This allows the company a few weeks to pay for the goods.
What Does End of Month Mean?
EOM refers to the time payment is due. In this case, the invoice is due within 30 days after receiving it, but 30 days doesn’t always fall on the end of a month. When the credit terms list EOM, usually the debtor has until the end of the month in which it is due to pay the bill.
