Difference Wiki

Discount Allowed vs. Discount Received: What's the Difference?

Edited by Sumera Saeed || By Sara Rehman || Published on December 7, 2023
Discount allowed is a reduction in price offered by a seller, while discount received is a price reduction obtained by a buyer.

Key Differences

Discount allowed refers to a concession in price a seller provides to a buyer, often to encourage sales or prompt payment. Discount received is the reduction in cost a buyer enjoys, typically as a result of early payment or bulk purchasing.
Sara Rehman
Dec 07, 2023
In accounting, discount allowed is recorded as an expense by the seller. Conversely, discount received is recorded as a saving or income by the buyer.
Sara Rehman
Dec 07, 2023
Discount allowed serves as a strategy for sellers to boost sales volume or ensure timely payments. Discount received benefits buyers by reducing the overall purchase cost, improving their buying power.
Sumera Saeed
Dec 07, 2023
The impact of discount allowed is seen in the seller's revenue, which decreases due to the price reduction. In contrast, discount received positively impacts the buyer's expenses, effectively lowering them.
Harlon Moss
Dec 07, 2023
From a financial standpoint, discount allowed affects the seller's cash flow and profitability, while discount received influences the buyer's cost management and budgeting effectiveness.
Aimie Carlson
Dec 07, 2023
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Comparison Chart

Perspective

Seller's perspective
Buyer's perspective
Sara Rehman
Dec 07, 2023

Accounting Treatment

Recorded as an expense
Recorded as income or saving
Sara Rehman
Dec 07, 2023

Purpose

To increase sales or ensure prompt payment
To reduce purchase cost or improve buying power
Sumera Saeed
Dec 07, 2023

Impact on Revenue/Expenses

Decreases seller's revenue
Reduces buyer's expenses
Harlon Moss
Dec 07, 2023

Effect on Cash Flow

Affects seller's cash flow
Influences buyer's cost management
Harlon Moss
Dec 07, 2023
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Discount Allowed and Discount Received Definitions

Discount Allowed

Price reduction given by a seller to a buyer.
We offered a 10% discount allowed to prompt early payment.
Sara Rehman
Nov 30, 2023

Discount Received

Reduction in purchase price obtained by a buyer.
Our company benefited from the discount received on early payment.
Sara Rehman
Nov 30, 2023

Discount Allowed

Seller's tool to encourage customer loyalty.
Our loyalty program includes a discount allowed for frequent shoppers.
Sara Rehman
Nov 30, 2023

Discount Received

Buyer's saving as a result of favorable purchasing terms.
The discount received from our supplier improved our profit margins.
Sumera Saeed
Nov 30, 2023

Discount Allowed

An expense in seller's accounting books.
The discount allowed on last month's sales affected our profit margins.
Harlon Moss
Nov 30, 2023

Discount Received

An income or saving in buyer's accounting records.
The discount received was recorded as a saving in our financial statements.
Sara Rehman
Nov 30, 2023

Discount Allowed

A selling strategy to boost transaction volumes.
Our end-of-season discount allowed increased the store's foot traffic.
Aimie Carlson
Nov 30, 2023

Discount Received

A tool for buyers to manage costs effectively.
Negotiating a larger discount received helped us stay within budget.
Harlon Moss
Nov 30, 2023

Discount Allowed

Concession in selling price for strategic purposes.
The discount allowed on bulk orders enhanced our sales volume.
Sara Rehman
Nov 30, 2023

Discount Received

Buyer's strategy to maximize purchasing power.
We leveraged our high-volume orders to maximize the discount received.
Harlon Moss
Nov 30, 2023

FAQs

What is discount allowed?

It's a price reduction offered by a seller to a buyer.
Sara Rehman
Dec 07, 2023

Why do sellers allow discounts?

To increase sales, encourage early payments, or build customer loyalty.
Sara Rehman
Dec 07, 2023

What is discount received?

A price reduction a buyer receives from a seller.
Sumera Saeed
Dec 07, 2023

Does discount received always mean savings for the buyer?

Generally, yes, as it reduces the overall cost of purchases.
Aimie Carlson
Dec 07, 2023

How is discount allowed recorded in accounting?

As an expense in the seller's financial records.
Janet White
Dec 07, 2023

Can discount allowed affect profitability?

Yes, it can reduce the seller's profit margins.
Sara Rehman
Dec 07, 2023

Why do buyers seek discounts?

To reduce purchase costs and manage their budgets effectively.
Sara Rehman
Dec 07, 2023

What is a typical scenario for offering a discount allowed?

During promotions, bulk sales, or for early payment incentives.
Aimie Carlson
Dec 07, 2023

Can discounts impact cash flow?

Yes, discount allowed can reduce cash inflow, while discount received can improve cash outflow.
Harlon Moss
Dec 07, 2023

Can discount allowed be a percentage or a fixed amount?

It can be either, depending on the seller's policy.
Janet White
Dec 07, 2023

Are discounts always monetary?

Primarily, though they can also be in the form of additional goods or services.
Aimie Carlson
Dec 07, 2023

Are discounts received usually advertised?

Not always; some are negotiated or part of a contract.
Janet White
Dec 07, 2023

How is discount received recorded?

As income or a saving in the buyer's accounting books.
Sara Rehman
Dec 07, 2023

How does discount received affect a buyer's financial planning?

It helps in effective cost management and budgeting.
Janet White
Dec 07, 2023

Do all companies offer discounts?

Not necessarily; it depends on their sales strategy and market conditions.
Janet White
Dec 07, 2023

Does discount allowed always lead to increased sales?

Often, but not always; it depends on the market and consumer behavior.
Harlon Moss
Dec 07, 2023

What's a common situation for receiving a discount?

When making early payments or buying in bulk.
Janet White
Dec 07, 2023

Is discount allowed beneficial for long-term customer relations?

Yes, it can build customer loyalty and repeat business.
Sara Rehman
Dec 07, 2023

Can a transaction involve both discount allowed and received?

Yes, in transactions between businesses, both can occur.
Aimie Carlson
Dec 07, 2023

Is negotiating for discounts common?

Yes, especially in B2B transactions.
Sara Rehman
Dec 07, 2023
About Author
Written by
Sara Rehman
Sara Rehman is a seasoned writer and editor with extensive experience at Difference Wiki. Holding a Master's degree in Information Technology, she combines her academic prowess with her passion for writing to deliver insightful and well-researched content.
Edited by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.

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