BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
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Detailed explanation-1: -An early payment discount is one form of trade finance in which a buyer pays less than the full invoice amount due by paying the supplier earlier than the invoice maturity date. An early payment discount is also commonly referred to as a cash discount or prompt payment discount.
Detailed explanation-2: -Cash Discount-This discount is provided by a seller when a buyer makes prompt payment in cash or equivalent. This discount is provided if the buyer makes the payment within a specified period of time. Due to this reason, this is also called prompt payment discount. These discounts are shown in the books of accounts.
Detailed explanation-3: -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.
Detailed explanation-4: -Allowance made for prompt payment is called trade discount.