Definition of Cash discount:
Incentive offered by a seller to a buyer for settling the invoice immediately on delivery or in a period substantially shorter than the conventional period in that industry or market.
Cash discounts are deductions allowed by some sellers of goods, or by some providers of services, to motivate customers to pay their bills within a specified time. Cash discounts also are called early payment discounts. The sellers and providers offering a cash discount will refer to it as a sales discount, and the buyer will refer to the same discount as a purchase discount.
Cash discounts refer to an incentive that a seller offers to a buyer in return for paying a bill before the scheduled due date. In a cash discount, the seller will usually reduce the amount that the buyer owes by either a small percentage or a set dollar amount.
How to use Cash discount in a sentence?
- A cash discount gives a seller access to her cash sooner than if she didn't offer the discount.
- An example of a cash discount is a seller who offers a 2% discount on an invoice due in 30 days if the buyer pays within the first 10 days of receiving the invoice.
- Cash discounts are deductions that aim to motivate customers to pay their bills within a certain time frame.
Meaning of Cash discount & Cash discount Definition