cash discount: meaning, definition, pronunciation and examples
B2Formal, Professional
Quick answer
What does “cash discount” mean?
A reduction in the price of goods or services offered as an incentive for immediate payment or payment in cash rather than by credit.
Audio
Pronunciation
Definition
Meaning and Definition
A reduction in the price of goods or services offered as an incentive for immediate payment or payment in cash rather than by credit.
In finance, a term for a reduction offered when settling an invoice before its due date, reflecting the time value of money. In accounting, it's an expense recorded in the buyer's books when taken.
Dialectal Variation
British vs American Usage
Differences
No significant difference in definition. In AmE, 'sales discount' or 'prompt payment discount' are also common synonyms. In BrE accounting, the specific term 'discount received/allowed' is more frequent.
Connotations
Neutral commercial term in both. Slightly stronger association with wholesale/trade transactions.
Frequency
More frequent in written business/accounting contexts than in casual speech in both varieties.
Grammar
How to Use “cash discount” in a Sentence
The supplier offers a cash discount for payment within 14 days.We took the cash discount.Payment terms are 30 days, with a 2% cash discount for payment within a week.Vocabulary
Collocations
Examples
Examples of “cash discount” in a Sentence
verb
British English
- The supplier will cash-discount the invoice if we pay by Friday.
- We always try to cash-discount our purchases to improve margins.
American English
- They agreed to cash-discount the order for us.
- Make sure to ask if they cash-discount for early settlement.
adjective
British English
- The cash-discount terms were clearly stated on the invoice.
- We reviewed the cash-discount policy.
American English
- Look for the cash-discount rate in the fine print.
- This vendor has a favourable cash-discount arrangement.
Usage
Meaning in Context
Business
Core usage. Found in invoices, contracts, and procurement discussions to manage cash flow. E.g., 'Our standard terms are net 60, but we offer a 5% cash discount for payment within 10 days.'
Academic
Used in finance, accounting, and business studies textbooks and papers when discussing working capital management, trade credit, and financial incentives.
Everyday
Less common. May be encountered in larger personal purchases (e.g., car, renovation) where the seller prefers immediate cash. 'The garage offered me a cash discount if I paid upfront.'
Technical
A specific accounting entry. For the buyer, a 'discount received'; for the seller, a 'discount allowed'. A key component in calculating the effective cost of credit.
Vocabulary
Synonyms of “cash discount”
Strong
Neutral
Weak
Vocabulary
Antonyms of “cash discount”
Watch out
Common Mistakes When Using “cash discount”
- Using 'cash discount' to mean any discount paid for in cash (e.g., a negotiated lower price). It specifically requires the discount being *contingent on* the cash/early payment.
- Confusing it with a 'cashback' offer (money returned after purchase).
FAQ
Frequently Asked Questions
Not necessarily. While historically linked to cash, it now generally means immediate payment or payment before the invoice due date, often via bank transfer, cheque, or other fast methods, as opposed to using credit.
No. A trade discount is a reduction from the list price given to a specific class of buyers (e.g., retailers). A cash discount is a reduction for prompt payment, regardless of the buyer's type.
Both can benefit. The seller improves cash flow and reduces credit risk and administrative costs. The buyer gets goods/services at a lower effective cost, provided they have the funds available.
In accounting, if you take the discount, you reduce the cost of the purchase (or record it as 'discount received'). If you forego it, you pay the full invoice amount.
A reduction in the price of goods or services offered as an incentive for immediate payment or payment in cash rather than by credit.
Cash discount is usually formal, professional in register.
Cash discount: in British English it is pronounced /ˈkæʃ ˌdɪs.kaʊnt/, and in American English it is pronounced /ˈkæʃ ˌdɪs.kaʊnt/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “'2/10, net 30' (a common commercial idiom meaning 2% cash discount if paid within 10 days, otherwise the full amount is due in 30 days).”
Learning
Memory Aids
Mnemonic
Imagine a cash register giving a DISCOUNT for using CASH. The 'cash' part highlights it's a reward for immediate, non-credit payment.
Conceptual Metaphor
TIME IS MONEY (saving time in payment collection saves the seller money, which is shared with the buyer).
Practice
Quiz
What is the primary purpose of a cash discount?