Hi Rainyday,
It is a practical issue,I want to know how much settlement discount can be given so there is break-even or better,my overdraft is at 6.1%.
I incorrectly thought that by giving customers a 3% discount to pay 30 days earlier would be better than paying overdraft interest of 5.1%,of course I should have known that 6.1% was per year but the settlement discount would be every month.
Now I am asking where is the break-even between settlement discount v giving an extra 30 days credit? Is there a spreadsheet or template around or by using an example of 10k (of sales) pm.
On a broader view,why give settlement discount
Thanks