What is Discount?
A Discount is a reduction in the selling price of the merchandise as indicated by the “Terms of the Sale”. There are two major types:
- An early pay or cash discount is an incentive for quicker payment from your B2B or Government Customer. It is a deduction for paying within a stated shorter period of time. For example, 3% Cash, 2% 10 days or Net 45 days is a typically seen early pay discount. Be careful that your large corporate Customer doesn’t take the 2% discount and still takes 60 days to pay you!
- A trade discount is not a reduction for early payment. Rather it is a deduction which the customer takes because the discount offered is customary in a particular industry or the customer purchased merchandise in large quantities.
RELATED TERMS
- Factoring Discount Fee or Factoring Rate
The Factoring Discount Fee or Factoring Rate is the cost to you for Invoice Factoring, A/R Management, and Credit Protection from eCapital. It is typically based on your monthly volume and creditworthiness of your Customers (the Account Debtors) and can…
- Burn Rate
The rate at which an enterprise spends money, especially one venture capital, angel or private equity-backed, in excess of income. A company cannot be Negative Cash flow forever (unless you are Tesla or Uber, apparently) and must eventually get to…
- Bill Rate
In the supply of temporary workers, the bill rate is the amount the buyer of staffing services is expected to pay the agency inclusive of the temporary worker pay, statutory expenses, benefits, and agency markup.