IS CASH DISCOUNT A USEFUL THING？

Summary
For the accounting blog assignment, I have searched an article called “IS CASH DISCOUNT A USEFUL THING?” “Following the civil war, and for that matter right up to recent years,” said a well-known business man, “there was no really scientific method of granting credit in general vogue.” This was largely the result of a lack of sufficient banking facilities, which made the distributor his own banker more or less, and which made him introduce the cash discount to encourage quick payment. With the growth of the country’s banking system, the size of the cash discount offered has dwindled.

Connection
In chapter 12, we have learned the credit discount earn. Usually companies purchase goods, they don’t pay by cash immediately because they don’t have such a large amount of cash in hands. They pay on the retail companies’ Account Receivable account. By the time the retailers sell their goods, but didn’t get the money. So actually they want buyers pay the money as early as possible. Therefore, they make a rule, such as credit discount earn. For example, 2/10, N30 means the due day is in 30 days after the transaction is made, and if people pay off their accounts in 10 days, they actually get a 2% refund back. This is a win win situation to both the buyer side and the seller side.

Reflection
Really, this is a good idea to all the companies. I would like to pay off the entire amount in the discount period. This is the best way to encourage people to pay off their accounts. But now I have a question. If people pay off their amount and get the discount, will the seller loss a huge amount of money? I think a complicated question such like this one, should be solved by my self when I learn more about accounting. Anyway, while people purchase goods, pay off earlier, refund better. But this kind of transaction only appears between companies to companies.