Cash Discount

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Dictionary Says

Definition of 'Cash Discount'

An incentive that a seller offers to a buyer in return for paying a bill owed before the scheduled due date. The seller will usually reduce the amount owed by the buyer by a small percentage or a set dollar amount. If used properly, cash discounts improve the days-sales-outstanding aspect of a business's cash conversion cycle.

Investopedia Says

Investopedia explains 'Cash Discount'

For example, a typical cash discount would be if the seller offered a 2% discount on an invoice due in 30 days if the buyer were to pay within the first 10 days of receiving the invoice.

Providing a small cash discount would be beneficial for the seller as it would allow him to have access to the cash sooner. The sooner a seller receives the cash, the earlier he can put the money back into the business to buy more supplies and/or grow the company further.
Search results for

'Cash Discount'

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    ... Discounting any stream of cash flows requires a discount rate, and in this
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  • Digging Into The Dividend Discount Model

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    ... of Forecasting Proponents of the dividend discount model say that only future cash
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  • DCF Analysis: Forecasting Free Cash Flows | Investopedia

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    ... for the company. In the next section of the tutorial, we will estimate
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  • Understanding Liability-Adjusted Cash Flow Yield

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    ... more, see Your Dividend Payout: Can You Count On It?) Advantages of LACFY
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  • Evaluate Stock Price With Reverse-Engineering DCF

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    ... over, say, the next 10 years, and then calculating how much investors should pay
    for that stream of free cash flows based on an appropriate discount rate. ...

  • Rental Properties: Cash Cow Or Money Pit?

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    ... After periodic cash flows are calculated, they are then discounted back
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  • Which is a better measure for capital budgeting, IRR or NPV?

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    ... findings. However, there are a number of projects for which using IRR is
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  • Should You Pay In Cash?

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    ... If you save up enough cash for the same purchase, you are giving yourself
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  • Small Business: Speed Up Receivables To Avoid A Cash Crunch

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    ... check can help reduce factoring charges, and could help prevent cash flow problems ...
    of factoring may be offset by taking an early payment discount for some of ...

  • Stock-Picking Strategies: Fundamental Analysis | Investopedia

    http://www.investopedia.com/university/stockpicking/stockpicking1.asp
    ... Discount factor - The number that brings the future cash flows back to year zero. ...
    Discount per year - The cash flow multiplied by the discount factor. ...

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