What are payment terms in a sales agreement?

Payment terms in a sales agreement outline the conditions under which a sale is considered complete, including when payment is due and any other relevant conditions that apply. These terms are crucial as they define the seller's expectations regarding the timing of payment and can specify discounts for early payment or penalties for late payment. By clearly stating these conditions, both the seller and buyer have a mutual understanding of their obligations, which helps to promote transparency and prevent disputes.

Other options do not accurately describe payment terms. For instance, the duration for which a customer can return products pertains more to return policies rather than payment terms. Similarly, the interest rate charged on unpaid invoices relates to late fees rather than the standard payment agreement itself. Minimum order quantities are a different aspect of sales agreements linked to the volume of purchase rather than the financial transactions involved.