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Before the maturity date if we pay to supplier or vendor we get some kind of rebate on payment.
It is gain to us and we pay to vendor after deducting out of outstanding balance
Early pay discount can be offered to customer whose credit period is too long say 90 days , so as to enable him to make early payment , thus protecting the amount from getting in bad debts and also improve on cash flow for the organisation.
Early payout discount or early payment discount is given to by companies to motivate credit customers to pay sooner. Let say the credit term is 30 days but you pay your dues before the due date, automatically the company will give you the discount for paying earlier than your due date.
