Understanding Terms of Sales: Payment Methods PDF

Understanding Terms of Sales: Payment Methods Terms of Sales refer to the various ways purchases are paid for. This presentation explores different payment methods, from traditional cash transactions to modern credit systems. by Shanique Salmon  Cash and Cheque Payments Cash...

Understanding Terms of Sales: Payment Methods Terms of Sales refer to the various ways purchases are paid for. This presentation explores different payment methods, from traditional cash transactions to modern credit systems. by Shanique Salmon  Cash and Cheque Payments Cash Cheque Convenient for small purchases. Widely accepted. Less common Universally accepted, even when for high-value transactions. traveling overseas. Credit: Delayed Payment Options 1 Trade Credit Businesses give traders (customers) time to pay, typically one to two months. 2 Credit Cards Consumers get 28 days to pay. Interest charges apply after this period. 3 Hire Purchase Also known as installment credit. Allows purchases over time. Requires initial deposit and fixed monthly payments with interest. Layaway: Pay Before You Take Reservation Seller reserves item for consumer during payment period. Full Payment Buyer receives goods only after completing all payments. Low Risk Seller retains goods if buyer fails to complete payments. Discounts: Incentives for Buyers Cash Discount Reduction in the total amount owed by a customer to a seller in return for prompt payment. They are used by sellers to encourage customers to pay quickly to Improve the seller's cash flow. Trade Discount Trade discounts are reductions in price that a supplier applies to a product’s cost when selling to a reseller, for them to make a profit on resale. For e.g. A customer who buys 100 units of a product may receive a 20% trade discount. Quantity Discount Reduction for bulk purchases. Encourages larger orders. Consignment: Sell on Behalf Placement Goods placed with another party to sell. Sale Consignor sells goods on behalf of owner. Revenue Sharereceives percentage of sales revenue. Consignor International Trade Consignment 1 Overseas Distribution Goods sent to international distributor for sale. 2 Delayed Payment Exporter receives payment only after goods are sold to end customer. 3 Risk Mitigation Reduces risk for distributor in new markets. Choosing the Right Payment Method Method Best For Risk Level Cash Small purchases Low Credit Large purchases Medium Layaway Planned purchases Low Consignment Specialized goods High