Sample Cash Discount Policy of a Company

Cash Discounts Policy

Almost all the companies provide Cash Discount on their Sales. Cash Sales provide security for Bad Debts & find liquidity. Cash discount of COD (Cash on Delivery) is a commercial discount provided by the companies to its Dealer /Customers if it receive payment immediately after receipt of material/Service by the Customer. Following is an example of Cash Discount Policy / Scenario provided by an Company:-

Customers/ Dealers/ OEMs/ Distributors are entitled for the cash discount based on the company’s overall policy as described below.

  • Cash discount allowed @ 3.00% on advance or against delivery (30 days Credit Period) and 1% addition Cash Discount if payment received within 30 days from date of delivery. 
  • If the payment terms are in cash, no cash discount is allowed. 
  • If the Dealers/ Distributors/OEMs make the payment within 30 days of the invoice date, they are allowed cash discount on the total value of the invoice. 
  • The cash discount is calculated on monthly basis by SM-S&D at HO for the eligible Dealers/ Distributors/OEMs. The amount is decided by a committee comprising of RMH, GM F&A and MD. 
  • Based on the above calculations a credit note will be prepared & Adjusted with the customer Outstanding (Current Account).


Post a Comment