Help with discount fees?
Scenario: A seller sells his goods to a buyer and the buyer agrees to sign a bill of exchange confirming the purchase and agreeing to make payment at a certain date.
IF the seller wants his money right away and sells the bill of exchange to a bank for a discount fee, does that mean he gets the full original amount right away and just has to pay whatever the interest would be?
Ok to avoid anymore snarky responses, what would be a reason for the buyer to sell the bill of exchange if he is paid less money in the end? Financial woes?
- Casey YLv 72 months agoBest Answer
Companies do this for cash flow, its not about being on hard times. Learn more about why cash flow is important to a business...
The faster a business gets money in the door, the faster they can use it for the business. In this example, they are selling a product. The faster they get their money, the faster they can order more of that product from the manufacturer (or materials if they make it). That's the easiest way to describe why companies offer early payment discounts...but there is a lot more to cash flow.
- olliverLv 62 months ago
To receive cash earlier.
- JudyLv 72 months ago
He wouldn't get the full original amount, just what he and the bank agreed to.
- Anonymous2 months ago
I have no idea what you are talking about. Neither do you
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- Mark IXLv 72 months ago
Are you seriously asking if he sells it for a discount does he get the full price? Do you honestly have no idea what "discount" means?