cash discount

[pacnw]

what is the bargaining chip cash holds verses check(personal or finanacial institute)?

I have thought of the statement, "... well I can pay you cash..." and the desire for a better deal.

Example; selling a car or home and the buyer offers cash at a discounted price or full price with a check/financed(on their end). either way seller gets his/her money, so why offer cash?


random, philosophical question.

[Tech Rob]

I would rather be paid by means other than cash. If I have cash in hand, I will always spend it on bullcrap I don't need.

[lynn comstock]

Why? The short answer is $$$$:
The offer from a customer is to hide the transaction from the government. (Or wife or ex.)
The appeal to the contractor is the same.
No sales tax and no permit.
Beer money.

[iraqveteran]

Easy in, Easy out.

Cash leaves no paper trail to be followed.


Now if your talking credit cards, then theres even more reason. The CC company charges the recipient of the transaction a fee that is a percentage of the total amount transferred....which is why many places(especially gas stations) require a minimum purchase to use a credit card.

When you use a CC to pay for a single soda, the store doesn't make any money. All profit got thrown straight into the fees associated with the transaction.

[pacnw]

more simple question than the answers given.

is cash a bargaining chip to lower the price?

I realize the benefit if you are the contractor or the sneaky individual, but this was more toward the transaction of a car or house purchase or along those lines.

P.S.- If cash is such a benefit to the merchant, then why not a cash price and other price, like gas stations used to do? And in this case, does a personal/financial(non credit card related if fee charged to recipient) qualify?

[newoldtech]

Yes, cash is definetely a strong bargaining chip in the purchase of a house. It totally by passes the having to get approved for a loan process. It can definetely give you an advantage over someone who has to hope to be approved especially in this tight lending atmospere we are in now.

As far as in the HVAC business, I can see it being an advantage to a small, one man type business owner who can more easily just put it in his pocket.

[Hunter844]

It's an ideology that is starting to slowly go away from what I can tell. You don't see too many younger folks thinking they can offer cash to help close a sale. Younger folks think credit card and debit card...not cash or check.

[Stamas]

My Buddy did alot of cash biz. offered a discount, was real good at paying his vendors weekly, went in and paid every week. No need for carrying a big monthly statement or credit line.
Then he went to build his dream house. On the property he paid cash for. Even in the real estate boom he couldn't get the loan.

[jthomley]

The cc fee is usually pretty small 1-3%, and that depends on the deal they can work out with the provider. Businesses can nego that rate too. Iraqvet (thanks for your service btw), its usually not that much, but sodas dont have that much profit in them. your right there!!!!!!!

I big purchases it can help to offer cash. Many furniture places will pass some of the savings to you if you nego that too.

Car-They hate it! It is a cleaner deal, but they make money on the financing so they would rather you fin it.

Houses-MUCH CLEANER deal! no survey, inspection (unless you want one), much less fees. If purchasing foreclosure (or similar) these are the deals the banks are going with even at slightly lower offers (sometimes).

Jewelry - Ask and they may split the cc fee with you.

BUT, who carries cash anymore?????? lol

[Diceman]

It's an ideology that is starting to slowly go away from what I can tell. You don't see too many younger folks thinking they can offer cash to help close a sale. Younger folks think credit card and debit card...not cash or check.

Yeah, but at Arbys and Burger King or for some gum at the drugstore?
How irritating is that, in a hurry and behind someone who doesn't have $4 in his pocket to buy a hamburger.
:gah:

[flange]

Look at it this way. There are costs associated with deals other than cash. for example, credit cards, cardholder gets a percentage of sale. financing, the bank gets a percentage of sale. Supply house, they have to carry the costs of goods sold until payment is made. cash has value. how much depends on the person receiving it. for small business such as a pizza shop, cash means hiding money. for HVAc type business though it is hard, because you have to buy goods, sell and install them. you couldnt run a business buying say 100 furnaces a month, and showing that you didnt install them, so for us its not really an issue, especially us commercial guys who get paid by business check and wait two months to get paid. I have no clients who pay by anything other than business check.

Some suppliers offer discount for paying in ten days. This is usually one percent. so, on a ten dollar sale, who cares, but on ten thousand its real money right? a hundred bucks is a hundred bucks. Money sitting in my business account earns little, but paying suppliers early adds a point to my profit. do a lotta volume it adds up.

[maintenanceguy]

cash is always better for the buyer and the seller. The only person who loses out in a cash sale is the bank because they can't charge fees and interest. I don' t like giving my money to the bank.

If you think the bank only gets 2 or 3% of a transaction, that's a big, big deal.

Remember, most of our money goes to necessities...lets say 80%. All that's left for fun, retirement, or extras is a small percentage..lets say 20%. Now save yourself that 2% on the whole thing and you've bumped YOUR money by 10% (2% of the 20% that YOURS).

The tighter your personal finances are, the more that 2% transaction fee is worth to your lifestyle.
And I do think I've gotten better prices with cash in hand.

[jthomley]

Just so its clear, my statemnet of..... "the cc fee is usually pretty small 1-3%". I was just stating about Iraqveteran (again, thanks for the service,) comment that not ALL the profit goes to bank for the cc processing. He is very true that it does eat into all profits for any business, but a business expenience any company will have to deal with in todays market. A bottle drink is less then a buck (but not much) and a store sells it for 1.29 - 1.59, they do make a little even with it being a cc transaction.

Of course, this is a fee the business pays not you personally. Saving any amount is very good, and no one would want to give up 2% of there income and my comment was not 1-3% of income, just the cost of the cc transaction.

Maintenanceguy - have I missunderstood your comment, or were you making just a gerenral comment? :)

jt

[jthomley]

Maintenanceguy - I have reread your post. I do get what your saying. yes, I agree with the 2% savings.

But, are you also saying you put all of that 20% of your income on your credit card? You can't always save by using cash tho. The gas station or dunkin donuts (mmmmm, we need one) wont give you a 2% discount on all purchases.

Of course, some cc give you some points/cash back stuff (minimumal I know)

jt

[maintenanceguy]

I don't put that 20% of my income on credit card. I don't put anything on credit card. I don't have one.

I'm saying that if your income is from your business, giving away 1% of your gross to bank fees is a big chunk because most businesses only make 5% profit. That 1% of gross is now 20% of your profit given to the bank.

Around here, all of the dunkin donuts are owned by indian families. I've never tried it but I bet that if you offered them $5 cash for a $6 box of dozen donuts, they wouldn't bat an eye. I'm sure they're more comfortable negotiating than they are trying to follow our stupid American rules not to haggle.

[jthomley]

You must mail in your payment to your ISP too, your connection is slow. I had forgotten all about this post from over a week ago. :)

Glad you dont use or even have a credit card, but they really arent a bad thing? I have two that I use all the time (not for $4 at the dunkin donuts tho, ha,ha), and get points and cash back. I have never paid a finance charge with either one, so used wisely, they are a good thing.

Your right! IF a business were only making 5%, and IF they were paying a 1% cc fee, it would be hard to stay in business if at all. BUT, if 100% of your business were cc, then you would probably have a lower fee.

Your Dunkin Donuts is a good example, if they run it well, they could be making 15% with some debit and maybe 22% without. There cc sales are probably a third of there business. If they do $10k per week, there cc fee would be about $33 (divide that by total profit $1500) and that is about 2% of their profit for the week. Is cc sales worth 2%, of course! Some people dont carry cash, and those customers will walk.

So giving a "discount" to your cc customers is just a cost of doing business.

I hope your just kidding that offering cash at a 16% discount would make them want to accept your order?

jt

[nacmama]

can't answer your question, but love your signature line:

If Guns Kill People, Do Pencils Misspell Words?

[Rio_Grande]

I am a 90% cash business, if someone wants a Check I get suspicious LOL. With the exception of my HVAC equiptment shop. they all want me to be a credit customer,,, I dont want to use their credit,, I will pay cash and all I want in return is my product and a reciept. The only reason I have a charge account at my shop is that is the only way I can get my bottles exchanged.

Cash is a definate advantage to me regardless of which side I am on. Paying,, then it is a easy transaction I dont have to worry about a check laying in a drawer for 3 weeks and I forget about it being out there.
On the recieving I dont have to worry about bounced checks and while credit is rarely a problem I did fight for 6 months on a charge owed to me that a customer had canclled. Never did get paid but that was one instance and it wasnt much money.