Invoice Credit Period

Introduction

The Invoice Credit Period in dealer financing refers to the duration allowed for the dealer to pay the invoice amount. This period starts either from the invoice date or the payment date, depending on the agreement terms. It defines how long the dealer has to settle the invoice without incurring penalties or interest.

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Example

Let's consider a practical scenario to understand how invoice credit period work in dealer financing:

Scenario

• Invoice Date - January 1, 2024

• Invoice Credit Period - 30 days

Calculation

Repayment Date - January 1, 2024 + 30 days = January 31, 2024

Explanation

• If the dealer pays the invoice by January 31, 2024, no penalties or additional interest are incurred.

• Payments made after January 31, 2024, may attract late fees or interest charges as per the terms of the financing agreement.

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Summary

The Invoice Credit Period sets a clear timeframe for dealers to make payments, benefiting both the corporate entities and the dealers by providing a structured payment schedule and avoiding potential financial penalties.