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DISCOUNTS

Discounts in contracts

Offering discounts to customers is normally justified when it results in higher overall profits. Even when a company has a shortage of cash, discounts can be granted in order to increase sales and cash inflows.

Discounts can be offered to encourage different types of customer behaviour

All other things being equal, discounts for early payment are preferable to penalties for late payment

Analysis of discounts

Discounts encourage early payment, but at a cost

 

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