Cash Discount Program Minnesota

A cash discount is a deduction allowed by the seller of goods or by the provider of services in order to motivate the customer to pay within a specified time. The seller or provider often refers to the cash discount as a sales discount. The buyer often refers to the same discount as a purchase discount. The cash discount is also known as an early payment discount.

The difference between a cash discount and surcharge

Not all sellers offer cash discounts, but a common cash discount is 1/10, net 30 and it will appear on the sales invoice. If the invoice is $1,000 and the buyer returns $100 the net amount due to the seller is $900 if paid within 30 days. However, the buyer can deduct $9 (1% of $900) if the buyer pays the seller $891 within 10 days of the invoice date. The seller often records the $9 cash discount as Sales Discounts. The buyer will record the $9 savings as Purchase Discounts or as a reduction to the cost recorded in inventory.

The difference between a cash discount and surcharge

To implement a successful cash discount program, the merchant educate their employees and customers on many of the confusing aspects of the cash discount program. The card brands require the merchant to provide at least one point of program notification prior to the sale that states that a service fee is applied to all sales and a discount is given for a cash payment. (We recommend several points of notification) Typical notification points include doors, registers, end caps and other prominent, highly visible areas. Every employee should be educated on how to verbally reference the program and should be announced at every transaction. Correct and consistent language is imperative for a successful implementation. Phrasing such as “Did you know you can save $X.00 by paying with a cash?” or “We offer X% discount on your purchase by paying in cash, would you like to take advantage?” can help encourage new buying behaviors. Language like this clearly conveys a discount for paying in cash. It is also recommended that merchant has some form of reference information handy to pass along to the customer if they have any questions. In working with countless business owners, there is one consistent fear about going to a cash discounting program. The fear is that by offering a cash discount program, they will anger and ultimately lose customers. Beyond the psychological advantage of using the jargon “Cash Discount vs. Surcharge”, the statistical data does not show any appreciable difference in sales loss due to cash discounting. In fact, our data shows that nearly 99% of customers simply disregard the convenience fee. By sticking to these key points and choosing a reputable service provider, you should be well on your way to implementing a successful cash discount program.

Occasionally some service providers allow a cash discount if their fee is paid at the time of the service. For example, my dentist allows a cash discount of 5% to patients without insurance if they pay on the day of the service. This cash discount saves the time and cost of billing, mailing statements, receiving partial payments, and can result in the dentist having more cash and less receivables.

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Cash Discounting Program SwyftPAY Minnesota – Permanently lower your processing fees using cash discounting.  Your customers will enjoy the benefit of the optional lower cash price and you will enjoy the benefit of more cash in your till at the end of the month.  With many different Cash Discount Programs now available in the marketplace, it is important to know what programs are legal and effective.  Cash Discounting from SwyftPAY is a Visa Approved, patented technology that is fully compliant with all state laws.  To get the right information to make the best decision for your business, call us today 888-256-8917.

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• Minnesota Cash Discount
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