The provision of discounts can stimulate not only an increase in sales, which is probably understandable to any salesperson and trade marketer. Discount can also be encouraged to reduce the time of the commodity loan provided to customers.
I have already detailed discounts in my time. Today, in a letter from one of the site visitors, I was asked to tell a little more about the discount provided for reducing the time required for the receivables to fall. Since the topic is a perpetual, so short, I will not “get on” a separate note from the marketer, but here, in a blog post, I will post a couple of lines as a comment on this topic.
Discount vs loan
Suppliers are often willing to provide discounts on delivery of goods on credit. By giving a discount to a manager for reducing the period of receivables, he often means something else: speaking of reducing the period of receivables, he means only that the risk of late payment will be completely excluded or minimized.
That’s about these wonders of gino discounts, I want to say. In fact, the contract must be paid on time. The fact that the manager is unable to, for various reasons, knock out the payment on time is not a reason for giving a discount for reducing the period of receivables. Weak management is not a reason for a discount.
What is a discount for a supplier – is it a decrease in profit from a deal? Nothing like this. If the buyer pays ahead of the settlement period established in the contract, this allows the supplier to reduce the reserves for covering cash shortages and minimize the use of overdrafts, and therefore provide the buyer with this very discount.
If the pseudo-manager gives a discount in the hope that “now the client will start paying on time”, then the discount as an additional benefit has nothing to form and in this case a discount to the buyer is a lost profit. I would take it from the pocket of the sales manager.