What does the term "5/10, net 30" signify in cash discount pricing?

The term "5/10, net 30" is a common cash discount notation used in invoicing that indicates details about payment terms. Specifically, it signifies that a buyer can receive a 5% discount if the invoice is paid within 10 days of the invoice date. If the payment is not made within that period, the full invoice amount is due within 30 days. This kind of pricing structure is a way for sellers to encourage quick payments, improving their cash flow while providing cost savings to buyers who are able to pay promptly.

In this case, while the other options suggest different discount levels or payment timeframes, only the first choice correctly captures the essence of the notation by clearly linking the specified discount to the appropriate timeframe for payment.