Cash discount definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Cash discount can be defined as: Reduction in the price of merchandise granted by a seller to a buyer when payment is made within the discount period. Cash discount is similar to what many know as a discount from a consumption side. Cash discount differs in that it usually is a discount with a specific goal, the goal of the cash discount being to receive payment sooner, cash discount being used to increase cash flow. The calculation of the cash discount will be similar to the calculation of any discount.
