Bradley Mfg. changed its credit terms from 2/10 net 30 to 2/10 net 40. In doing so, the firm has lowered the effective annual cost of credit for their customers.

Effective Annual Cost

The total cost of a loan or investment, expressed as an annual rate, including interest and any fees or additional costs.

Credit Terms

Refers to the conditions, including payment timelines and interest rates, under which credit is extended to borrowers.