What does 2/10 n/30 mean?

2/10 or 1/10 n/30 are discounts that offer an incentive for a customer to pay for purchases in a timely manner. A company offering terms of 2/10 is offering a discount of 2% provided that the invoice is paid within 10 days.
This amounts to a sizable interest rate for paying quickly.

• Paying invoices during the discount period benefits the payer with a savings.
• Speeds up the cash collection for the company offering the incentive, but at a cost.
• Should a company not take advantage of the discount, then the n/30 simply means that the invoice is due within 30 days at the full amount. 

In first semester accounting, this concept is relatively simple, but in later semesters the issue becomes more complex. To account for the discount, debit cash for the actual amount received, debit sales discounts for the deduction taken, and credit accounts payable for the full amount.

Example:
Company A purchases $5000 in inventory from Company B. Terms of the sale are 2/10 n/30.
Within ten days Company A remits the invoice; $5000. less 2% equals $4900.
Company B makes the following journal entries:

Debit Cash 4900
Debit Sales (or Service) discounts  $100
                    Credit Accounts Receivable $5000


Or Within 30 days (but more than 10 days) Company A pays the invoice.

Company B makes the following journal entries:

Debit Cash 5000
      Credit Accounts Receivable $5000

The difference is that Company A did not take advantage of the discount and paid after the 10 days, so they remit the full amount of the invoice.