Question

A few months before, a major B2B supplier raised prices of its products 10 percent to cover changes in market conditions. He was surprised to find how the orders from his normal customers plummeted. His normal order was $1,100. After the price increase, the average order dropped by 25 percent. He became concerned that customers might look elsewhere. For this reason, he decided to start offering discounts. When one of his loyal customers, David, purchases $950 worth of product for his firm, the supplier gives David the terms "4/20 net 30." He wants to maintain his relationship with David and would ideally like to receive payment in less than a month. Refer to Scenario 12.5. What type of discount is the supplier offering David?

Answer 1

Early payment discount

Step-by-step explanation:

4/20 net 30 mean the normal payment term is 30 days; but if buyer pay within 20 days, he can enjoy 4% discount