Discounts and allowances

The or the discount (from the Italian sconto to scontare, " deduct settle ") is a discount on the invoice amount for payment within a specified time. If payment is subject to deduction of a discount the customer received from the supplier a certain credit performance in the form of a currency and / or discount period. The charge or credit interest rate for the supplier in this case is equal to zero.

Base

The tax base the discount is usually the sales to target sales prices including VAT, that is, the gross sales. Occasionally, the discount will be calculated after the net turnover (excluding VAT ). The net cash discount is more favorable to the supplier than the gross cash discount under otherwise identical conditions, because it increases the revenue (see Lauer, pp. 97-103, especially p 101). The discount basis is not always the full amount, but - especially in the craft - often only the pure material cost share. Production costs are labor and "may" not be as maintenance bills skontiert, which is only a custom, however, and has no legal basis. The base is basically free negotiable. You should be designated in the offer and on the invoice.

Discount rate

As a discount rate that is specified in percent of the tax base discount is called. The discount rate is usually two to three percent, it can be constant or staggered in time. In a time-based discount season of the cash discount rate is higher, the shorter the discount period. An example of this offer, the terms of payment of the German textile industry, in terms of a cartel exists. After the invoices are payable as follows: within ten days with four percent discount, or from the 11th to 30th day with 2.25 percent discount, or from 31 to 60 days net.

Terms of payment

The terms of payment " within eight days minus two percent discount, within 30 days net " means: With payment of the invoice within the discount period of eight days from the payer two percent may be deducted from the invoice amount. If payment is made after the discount period, the full amount is due. Can the debtor more than 30 days, default interest and any collection expenses are to be paid. If he skontiert after the discount period, there is a forced discount, the supplier may claim from the debtor.

Give a cash discount or take advantage of payment?

The use of the discount period represents a short-term unpaid supplier credit Extrapolating the cash discount compared to the time to get a very high interest rate per year is indicated. As a rule, one should therefore give a cash discount. For invoice recipient, it may be advantageous to take a bank loan to take advantage of the discount.

Discount calculation

The discount is part of the cost price calculation. The price before discount is the target selling price, the price after discount is the cash price:

Example: Target Price = 100,00 € / ME; Discount rate = 3 % = 0.03

Discount modification

The discount rates are rarely modified in practice. reasons:

• The reduction once granted discount rates is towards the customers difficult to enforce
• The increase in the discount rates will be omitted from the supplier, because it is hard to undo.

However, it should be noted that discount represents a mitigierendes tool with respect to the default risk. Customers who have an increased risk of default, but have sufficient liquid assets will be contacted by suppliers preferred to shorter payment terms with discount. Credit management in the company is to be aligned to it.

Discount as interest on arrears adoption

Discount may be considered as interest on arrears adoption: The invoiced amount includes interest that is entitled to deduct under the discount period, the customer.

For example, if the terms of payment " within 8 days less 2 percent discount, within 30 days net " applies: