Early Payment Discount
Definition
A reduction a seller offers to encourage customers to pay before the due date. It improves cash flow for the seller at the cost of a small margin, and lowers the cost of goods for prompt buyers.
Related Terms in Invoicing & Sales
Late Payment Fee
A charge added to an invoice when it is paid after the due date, intended to discourage slow payment and compensate for the delay. Its enforceability and rate may be governed by contract or law.
Quote (Quotation)
A document giving a customer a fixed or estimated price for goods or services before they commit. Accepting a quote often converts it into a sales order or invoice.
Estimate
An approximate statement of the likely cost of a job before the final price is settled, common in trades and services. Unlike a firm quote, it can change as the scope of work becomes clearer.
Invoice Number
A unique identifier assigned to each invoice in a sequence, used to reference, track and reconcile it. Many tax systems require invoice numbering to be sequential and gap-free.
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