http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9A06E4DB113CE733A25755C1A9619C946796D6CF&oref=slogin
Summary:
This is an article from The New York Times in July 6th, 1916. This is an article that talks about the problem of cash discounts which still exists today. The problem of cash discounts it is talking about in the article is that is cash discounts useful, and should they abolished cash discounts. Cash discounts’ primary purpose is to encourage business to quickly pay their bills. However, because of the growth of the banking system, cash discounts have been largely reduce. Therefore, some people found there are no point to give out discounts, since the discounts are so little which they can’t encourage anyone to pay faster.
Connection:
In chapter 12.3, it introduces cash discount. In order to encourage the customers to pay promptly or early, cash discounts have been offered to the consumer. Although this article is about a century ago, this issue still exists. From the textbook, we can see that most of the discounts are around one to two presents when the customer pays within a certain days. However, one or two presents discounts are not going to make that much difference if the customers purchase a small among of merchandises. In this case, those customers are not going to pay earlier for the discounts. As a result, the cash discount may not achieve its original purpose when it is offer to the small business.
Personal Reflections:
Even though the article is very old, I think it brings out an important issue that most students never think of. After I read this article, I do want to find out more about this topic: “Is cash discount effective on encouraging customer to pay on time?” I am also thinking besides cash discount some there other methods that may be as effective or more effective and are able to apply to both large and small business to get customers pay one time, such as providing some special services.
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3 comments:
This article also gets me thinking if cash discount is effective to get customer to pay on time. In my opinion, i think cash discount will be effective because all people love to get something for a cheaper deal. Therefore people are willing to pay in an earlier time just to get the special offer. There are many more ways that are other ways to get customers to pay quicker, but i think giving cash discount is the best way. Who doesn't discounts from the goods they buy? Therefore cash discount is highly effective to get customers to pay earlier.
Hey Ronald,
It's very interesting how you found an article that is so old, and how it relates to chapter 12.3 so well. I agree and disagree with you. First, I too believe that there are many other ways businesses can do to encourage their customers to pay on time, beside cash discounts. I disagree with you, because I believe the word "discount" will always get customers to do what ever it takes to save some money, even if it's a small sum
Hi, Ronald,
Your article is so old, but it tells the truth. To encourage people to pay earlier, companies should make discount. I agree with your point, the growth of the banking system, cash discounts have been largely reduced. Therefore, people won’t pay earlier for maybe just under fifty dollars. If no one is going to pay earlier, companies have no point to make credit discount. I am so amazing that an article in 1916 can related to 1990s’ accounting book. That is so interesting to me.
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