reduction in a selling price for prompt payment.
trade credit feature providing for a deduction if payment is made early. For example: trade terms of “2% 10 days net 30 days” allow a 2% cash discount for payment in 10 days. Term also refers to the lower price some merchants charge customers who pay in cash rather than with credit cards, in which case the merchant is passing on all or part of the merchant fee it would otherwise pay to the credit card company.
percentage reduction in the gross price given by a seller to a buyer who pays within a set period of time. Cash discounts are given to shorten the length of time the seller must wait to collect the amount due. Cash discounts are offered to buyers in most industries, including media buyers.
A common business phrase for a cash discount is “2/10, net/30,” meaning that a 2% discount is offered if the amount due is paid within 10 days; otherwise 100% of the amount due is payable in 30 days. For example, if the amount due is $100, the buyer may pay $98 within 10 days or $100 within 30 days.