What do credit terms specify regarding the repayment of debts?

Credit terms are crucial in establishing the conditions under which debts must be repaid. They typically detail the timeframe allowed for making payments and may include provisions for discounts if the payment is made within a specified period. This incentivizes early payment and helps manage cash flow for both the lender and the borrower.

In this context, the correct response highlights that credit terms outline not just when payments are due, but also how borrowers can reduce their overall cost through prompt payment. Such specifications make it easier for businesses to plan their finances and maintain good relations with creditors.

The other options, while related to debt repayment, do not comprehensively encompass what credit terms cover. Immediate payment without discounts lacks flexibility and does not encourage timely payments through incentives. Limits on debt amount relate more to credit limits and availability rather than repayment terms. Lastly, specifying interest rates for late payments addresses penalties for overdue accounts, which is important but does not encompass the broader scope of conditions including payment timing and discounts inherent in credit terms.