Dictionary of Accounting Terms: sales discount
sales discount
cash given by the seller to the purchaser for early payment of the account due. For example, assume that the credit terms of a sale are 1/10, net/30. This means that if the customer pays in 10 days, 1% off the invoice price is granted. However, the customer must pay for the goods no later than 30 days after the date of sale. Note that if the customer remits after 10 days (but before 30 days), no cash discount is obtained.
Another common term of sale is giving a percentage discount when the customer pays within a specified time period after the end of the month (EOM) of sale. An example is a discount of 2% if payment is received within 20 days after the month of sale.
