Sales discount

Written by Fmi.Online Friday November 11, 2022
 A sales discount is a cash discount that manufacturers often give retailers for paying off accounts during the discount period. A sales discount is useful for both the retailer and the manufacturer. The retailer can pay less for its inventory while the manufacturer can receive its cash sooner.

Explanation:

  Most retailers buy inventory on account or on credit. Rarely does a retail chain pay manufacturers  for inventory and supplies in cash. Most of the time the retailer has an account or line of credit with the manufacturer to buy inventory. These retailers can often receive a cash discount or sales discount if the balance on their account is paid off in a certain period of time.Remember, cash flow is important to any business. Manufacturers and wholesalers don’t want to have outstanding accounts receivable. They want cash to pay their own bills and meet their own current liabilities.

In a nutshell: 

  • A sales discount is a reduced price offered by a business on a product or service. 
  • Learn how to include discounts on invoices. 
  • A sales discount, also commonly known as just a 'discount' provides customers of a business with a reduced rate on one or more of the products or services being offered.
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