PROFITABLE DISCOUNTS: Don’t Overlook The Potential Savings Of Trade Discounts

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    Everyone is aware of discounts. Discounts are offered to encourage a self-storage operation’s customers to pay faster. A number of self-storage businesses use a “one month free” offer that is a discount of sorts to attract new customers.

    Just as some self-storage facilities offer prompt payment discounts or long-term contract discounts, suppliers often extend discounts in an effort to improve their cash flow. Few self-storage operators, however, have given much thought to either the cost of offering discounts or how much can really be saved by taking advantage of those discounts.

    Discount, What Discount?

    Many self-storage facilities and businesses closely follow the old adage: Always delay cash outflows. For a surprising number of business owners and managers, that means always paying bills on time, but never before they are due. In reality, most self-storage businesses would be better off paying a bill early to take advantage of the trade discount. Consider the math.

    The supplier’s invoice includes credit terms, listing the period of time for which credit is extended, the size of the discount offered if the buyer pays cash, and the date the credit period begins. A cash discount is a reduction in the purchase price provided the buyer pays within a specific period.

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