Managing cash – discount terms

Discount defined: is a deduction from the usual cost of something in a dealership setting could be parts, bodywork or service work performed, typically the discount is given for prompt or advance payment or to a special category of buyers.

Common discount terms:

  • Accumulation discounts – Discounts for large purchases
  • Coupons – These have certain terms, such as a certain quantity has to be purchased or if the customer is past a certain age
  • Discount card – Issuing cards that give certain customers or any customer a discount
  • Employee discount – Offered to employees
  • Partial payment discount – When a seller needs cash flow, he may offer a partial discount
  • Preferred payment method discount  – Some retailers give customers a lower price if they pay with cash. This saves the fee the retailer pays on credit cards.
  • Prompt payment discount – The wholesaler or manufacturer gives a discount to the retailer at the list price or catalogue price. This sometimes applies to promotions.
  • Rebates – A refund mailed to the purchaser after a purchase

Read more at http://examples.yourdictionary.com/payment-terms-examples.

 

Depending on the Data Management System the dealership can automatically set up the discount terms in the system.  Upon completion of the recording process in the Data Management System the next step is the reconciliation process and final payment issued before the agreed upon due date.  At this time the dealership can take advantage of all available discounts for invoices posted and ready for payment.  Although a vendor may be willing to offer a pay in full discount, they may not disclose this information.  In my opinion always a good idea to reach out to the vendor to ask if they offer a discount if paid in full within a certain date.  The appropriate time to request the discount is when requesting credit to do business with that vendor.