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many companies offer a cash discount to encourage customers to pay on time, and if you...

many companies offer a cash discount to encourage customers to pay on time, and if you think about the money saved in collections and bad debt, it may come out well worth the discount. How else do companies try to collect what is owed to them quickly?

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Answer #1

Companies offer favorable credit terms in which they give credit for certain days beyond which no cash discount will be given. Beyond the discount period the payment has to be done in full.
They can receive cash by factoring account receivable in which company can sell its account receivable to a third party with some discount. The risk of collection lies with the third party but the company gets cash immediately.

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