Distinguish between cash and trade discounts?

I think that the difference is: The amount of the reductions of the sum to be paid is known as a " cash discount" and a discount on the retail price of something allowed or agreed between traders or to a retailer by a wholesaler is a trade discounts.

Please let me know if I am right or wrong! And I still really don’t understand the difference between the two discounts, so it would be helpful if you could explain it to me in a better way! thank you!

Both comments and pings are currently closed.

2 Responses to “Distinguish between cash and trade discounts?”

  1. Fairfax says:

    One is a discount given to anyone for payment in cash. The other is a discount given only to trades people (i.e. not available to the general public)

  2. mindcrime828 says:

    Trade discounts are those that given at the time of the sale. Example: Manufacturer normall sells a widget for $50, but has an agreement with a particular distributor that they receive a 5% discount if they purchase more than 10. This distributor orders 20 widgets, so they would only pay $47.50 each instead of the normal $50.

    Cash discounts are those given at the time the customer pays for the shipment. Many companies give out cash discounts for paying early, such as cutting 2% off the total if paid within 10 days. Example: Same scenario as above with distributor buying 20 widgets at $47.50 each ($950). This distributor has payment terms of 2% 10 / net 30 meaning if they pay within 10 days, they earn a 2% discount, otherwise payment is due in 30 days. Distributor pays in 8 days and takes the eligible cash discount of 2% ($19). Therefore they only remit payment for $931 ($950 total – $19 cash discount). These cash discounts are also referred to as terms discounts.

    Another example of a cash discount would be if a customer paid immediately in cash, rather than taking credit terms, the seller might reduce the price.

Powered by WordPress | Designed by: free css template | Thanks to hostgator coupon and web hosting reviews