Question

Survey several businesses who receive large shipments from their vendors. Do they take advantage of discounts? What are the terms that they receive on their invoices?

Answer 1

When we did a survey we found that about 60% of them take advantage of discounts whereas the remaining 40% of the business do not take discounts.

The larger stores (departmental stores) are found to get a larger time frame for the discounts and are able to advantage of them. Hence the prices of the products from these large stores are cheaper for end customers. The neighbourhood Mom and Pop stores do not take the discount as they only get a shorter discount period. Larger stores have discount terms as 3/30 net 90 meaning they get a 3% discount if they pay up in 30 days or they can pay the full amount in 90 days. The smaller stores get a discount term 2/10, net 30 meaning they get a discount of only 2% for 10 days and pay full amount in 30 days.