A sales discount is a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer. This approach is commonly used when a seller is in immediate need of cash.
An example of a sales discount is 2/10 net 30 terms, where a customer can take a two percent discount if it pays an invoice within ten days of the invoice date, or pays full price 30 days after the invoice date. The sales discount concept can also be applied to cash sales, where a discount is offered in exchange for immediate payment.
The inherent interest rate associated with a sales discount offer can be quite high, so more established organizations tend not to offer it to their customers.