COP Pricing, Discounts & Order Financials 1 — Questions and Answers
Question 1: What is a trade discount?
- A discount given to customers who pay their invoice early
- A price reduction offered by a seller to buyers in a specific trade channel, such as wholesalers or retailers (Correct answer)
- A discount triggered when a customer buys a bundle
- A promotional price available to all customers for a limited time
Correct answer: A price reduction offered by a seller to buyers in a specific trade channel, such as wholesalers or retailers
Trade discounts recognize the buyer's role in the distribution channel and are typically applied as a percentage off the list price before any other discounts.
Question 2: What does 'net 30' payment terms mean?
- The customer receives a 30% discount on their order
- The full invoice amount is due within 30 days of the invoice date (Correct answer)
- The seller must ship within 30 days of receiving the order
- A 30-day price lock is guaranteed after the quote
Correct answer: The full invoice amount is due within 30 days of the invoice date
Net 30 is a standard B2B payment term specifying that payment is due in full within 30 calendar days from the invoice date.
Question 3: What is a quantity discount?
- A discount for orders placed before a promotional deadline
- A price reduction granted when a buyer purchases above a certain quantity threshold (Correct answer)
- A rebate issued at year-end based on total spend
- A discount applied only to clearance items
Correct answer: A price reduction granted when a buyer purchases above a certain quantity threshold
Quantity discounts incentivize larger orders by reducing the unit price as order volume increases, lowering the seller's per-unit fulfillment cost.
Question 4: What is a price list in B2B order processing?
- A published catalog of products available for ordering
- A structured document defining the unit prices for products, often tiered by customer segment or contract (Correct answer)
- A real-time pricing feed from the supplier
- A list of items on sale this week
Correct answer: A structured document defining the unit prices for products, often tiered by customer segment or contract
Price lists ensure consistent, contractually agreed pricing is applied to orders, preventing billing errors and disputes between buyers and sellers.
Question 5: What is a promotional code (promo code) in order processing?
- A code used internally to route orders to different warehouses
- A customer-entered alphanumeric code that triggers a discount or special offer on their order (Correct answer)
- A carrier service code for expedited shipping
- A product category code used in the ERP
Correct answer: A customer-entered alphanumeric code that triggers a discount or special offer on their order
Promo codes are a marketing tool that applies pre-programmed discounts or benefits at checkout when the customer enters the correct code.
Question 6: What is the purpose of a credit limit on a customer account?
- To set the maximum discount the customer can receive
- To define the maximum outstanding balance a customer can carry before new orders are placed on hold (Correct answer)
- To restrict the number of orders a customer can place per month
- To limit the product categories a customer can purchase
Correct answer: To define the maximum outstanding balance a customer can carry before new orders are placed on hold
Credit limits protect the seller from overextending credit to buyers, reducing bad debt risk by halting new orders when the customer's balance exceeds the approved threshold.
COP Pricing, Discounts & Order Financials 1
What is a trade discount?