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LSDefine
Simple English definitions for legal terms
cash discount
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A quick definition of cash discount:
A cash discount is when a seller gives a lower price to a buyer who pays with cash right away. It's like a little reward for paying quickly. It can also mean a lower price if the buyer pays by a certain date. This is different from other types of discounts, like when a store has a sale for everyone.A more thorough explanation:
Definition: A cash discount is a reduction in the price of a product or service offered by a seller to a buyer who pays in cash or within a specified time period. It is a type of discount that encourages customers to pay quickly and helps sellers to improve their cash flow.
Example: A furniture store offers a 5% cash discount to customers who pay for their purchases in full at the time of purchase. For instance, if a customer buys a sofa set worth $1000 and pays in cash, they will only have to pay $950 (i.e., $1000 - 5% of $1000).
This example illustrates how a cash discount works. The seller offers a lower price to the buyer who pays in cash, which benefits both parties. The buyer saves money, and the seller gets paid faster, reducing the risk of bad debts and improving their cash flow.