Supplier Allowance - Definition & Meaning
What is Supplier Allowance?
Discounts or allowances are used as rewards to increase sales in the short term. Also these are used to reward valuable customers and to encourage the distribution channel members to perform a function effectively.
Trade allowances are deductions which are given by the wholesaler/ manufacturer to the retailer at the list price. Cash Discounts are given by the creditor to the debtor to motivate the debtor to make payment within the specified time period.
The discounts and allowances dealing with payment:
a) Prompt Payment Discount
b) Preferred Payment Method Discount
c) Partial Payment Discount
d) Sliding Scale
e) Forward Dating
f) Seasonal Discount
The discounts and allowances dealing with trade:
a) Bargaining
b) Trade Discount
c) Trade Rate Discount
d) Trade in credit
The discounts and allowances dealing with quantity:
a) Cumulative quantity discount
b) Non-cumulative quantity discount
c) Dependence of price on quantity
The discounts and allowances dealing with customer characteristics:
a) Disability Discount
b) Educational or student discount
c) Employee discount
d) Military Discount
e) Age related discounts
f) Special prices offered to friends of seller
g) Special prices offered to local residents
Other discounts and allowances include discount cards, coupons, rebates, promotional allowances and brokerage allowances.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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