Answer:
In the books of seller, cash discount is deducted from the invoice price when the buyer pays earlier or on the date/term stipulated
Step-by-step explanation:
- An early payment discount or cash discount is the reduction in invoice price due to payment before the due date.
- A number of factors should be considered to see how much discount should be provided . Some of them are: check the cash discount offered by competitors, and check the payment history of the customer.
- This strategy helps close the gap in cash flow and boost the working capital.