Q: Can I offer net-30 terms with a 2% discount for prompt payment?

A: This arrangement seems parallel to the two-tier pricing for cash/credit discussed in our last newsletter, since there is a lower price for prompt payment, and a higher price for payment in 30 days. Thus, according to most authorities, this payment arrangement is considered a form of ribbis, interest, and allowed only by means of a heter iska. [According to the Chochmas Adam, however, this arrangement is permissible, since the net-30 price reflects the true market price.] It is also permissible to provide the 2% discount in the following manner: The sale should be concluded and a single price set with net-30 terms alone. After the goods are already handed over, or the transaction is consummated with a kinyan, then the invoice may be sent allowing a 2% discount for prompt payment. (Y.D. 173:3)