Which term is described as the best payment term for the buyer?

Which term is described as the best payment term for the buyer?

• A. Cash on delivery
• B. Payment on Account (like a credit card)
• C. Net 60 days
• D. Letter of credit

Answer: (B)

Paying on account, like using a credit card, is best for the buyer because it gives quick, convenient settlement with built-in protections and flexibility. The buyer can receive and use the goods immediately while the card issuer handles payment to the seller, often with a grace period that allows paying later without interest if the balance is paid in full each cycle. This helps maintain cash flow and reduces the administrative work and cost compared with more complex methods. Cash on delivery requires immediate funds, which hurts cash flow. Net terms (like Net 60) extend payment but rely on creditworthiness and can still expose the buyer to penalties if payments slip. A letter of credit protects the seller and adds significant cost and paperwork for the buyer. In typical practice, a credit-card–type payment on account offers the most practical balance of speed, protection, and ease for the buyer.

Paying on account, like using a credit card, is best for the buyer because it gives quick, convenient settlement with built-in protections and flexibility. The buyer can receive and use the goods immediately while the card issuer handles payment to the seller, often with a grace period that allows paying later without interest if the balance is paid in full each cycle. This helps maintain cash flow and reduces the administrative work and cost compared with more complex methods.

Cash on delivery requires immediate funds, which hurts cash flow. Net terms (like Net 60) extend payment but rely on creditworthiness and can still expose the buyer to penalties if payments slip. A letter of credit protects the seller and adds significant cost and paperwork for the buyer. In typical practice, a credit-card–type payment on account offers the most practical balance of speed, protection, and ease for the buyer.