You offered 2% for early payment. They took the 2% and paid in forty days.

Early settlement discounts are the one price cut most businesses hand over without negotiating anything in return, and usually to the customers who were already paying on time.

By Steve 5 min read
Abstract bridge artwork for You offered 2% for early payment. They took the 2% and paid in forty days.

An early settlement discount looks like a cash-flow tool. It behaves like a price cut. The difference matters, because a price cut is usually negotiated: you give two points and you get volume, a longer term, a reference, an exclusivity. An early payment discount is given to everyone who qualifies, in exchange for a promise that is difficult to verify and awkward to enforce. And the customers most likely to accept it are the ones whose money was never in doubt. The mechanism is worth setting out properly, because the…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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