# Cash Discount?



## YardMedic (Nov 29, 2006)

Hey everyone!

This is a landscaping situation, but it's very easily a snow removal issue as well. Bid a project of moderate size a couple days ago as requested, and waited on a reponse by email. Just got a question back from the client, "Is there any discount for cash payment?"

It is the second time this season that someone has done this, and my initial feeling is aggravation because it seems like these folks just want me to do something shady in the eyes of uncle sam. To me, paper trail doesn't make a difference because it goes to the accountant whether paid cash, check, food stamps, or livestock. Anyone see the question any differently? Is this just a sign of the times that people resort to tricky ways to accomplish their goals? And as I said, I asked this here because I could very easily see someone doing the same for a winter contract (knock X dollars off because there's no record of it). 

Thanks for the thoughts!


Kevin


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## grandview (Oct 9, 2005)

Most of the time if there is cash they will save them the sales tax.Is this a homeowner?


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## Paul D (Feb 27, 2012)

I'd tell them if the hire someone that is accepting cash and giving a discount i.e not reporting the income, they are likely hiring someone without insurance or that will cancel insurance after season has begun and they no longer need to show proof of insurance.

BTW, GV, No sales Tax in NH.


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## Meezer (Apr 3, 2010)

YardMedic;1489849 said:


> Hey everyone!
> 
> It is the second time this season that someone has done this, and my initial feeling is aggravation because it seems like these folks just want me to do something shady in the eyes of uncle sam.


I don't understand why it would be be something shady in the eyes of uncle sam?

The Feds print money. On the paper money that they print it clearly states:

"THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE"



> To me, paper trail doesn't make a difference because it goes to the accountant whether paid cash, check, food stamps, or livestock. Anyone see the question any differently?


Same here, it all goes to the accountant



> Is this just a sign of the times that people resort to tricky ways to accomplish their goals?


It depends what "their goals" are. A lot of contractors charge their customers an extra fee, surcharge, etc., if their customers are paying with Paypal, CC, etc.,


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## YardMedic (Nov 29, 2006)

Thanks guys. The "shady" is my interpretation of motive. I take it as this homeowner thinking my time & expenses are inflated to offset costs of running a legitimate business. Part of me wants to come back with a witty reply about his "incentive" being the best damn wall for the money. 

GV got the PM. I hear ya there! ussmileyflag


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## goel (Nov 23, 2010)

We offer 3/10 and 2/15 and N30 The sooner the cash/check/transfer/payment is in my hands the better. Method of payment is irrelivant. Speed of payment is everything. This is for non resi stuff


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## jmac5058 (Sep 28, 2009)

Just because the note says " Legal tender for all debits" does not make you exempt from paying taxes . Just ask Al Capone.


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## basher (Nov 13, 2004)

My response is "that is the cash price, we charge a 3% administrative fee for all credit card purchases or open accounts"

You know they will remember you did the work if there is an issue, then they tell their neighbor, "offer him cash its cheaper" then the next one writes a check for the lesser amount because "you only charged XXXX this amount, why should I pay more" or they give you cash expect the discount AND a receipt.


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## Meezer (Apr 3, 2010)

jmac5058;1490026 said:


> Just because the note says " Legal tender for all debits" does not make you exempt from paying taxes . Just ask Al Capone.


Just because someone gives cash discounts for payment doesn't automatically mean that they aren't paying taxes.

Offering cash discounts is a very common & legit business practice:

Visa says, "Merchants may steer customers to an alternative method of payment, such as providing discounts for cash"

http://usa.visa.com/download/merchants/visa-international-operating-regulations-main.pdf

MasterCard says, "A Merchant may provide a discount to its customers for cash payments"

http://www.mastercard.com/us/merchant/pdf/BM-Entire_Manual_public.pdf

American Express says, "Merchants may offer discounts or in-kind incentives from their regular prices for payments in cash"

https://www209.americanexpress.com/...s/MerchantPolicyPDFs/Oct2010_US_ RefGuide.pdf

http://www.foxbusiness.com/personal-finance/2010/03/11/pay-cash-ask-discount/

http://www.usatoday.com/money/perfi/credit/2008-07-07-credit-card-gas-fees_N.htm


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## basher (Nov 13, 2004)

Meezer;1490066 said:


> Just because someone gives cash discounts for payment doesn't automatically mean that they aren't paying taxes.
> 
> Offering cash discounts is a very common & legit business practice:


Charge card costs run 3% or better. Offering a 3/5% discount for cash doesn't make the merchant anymore money but it does save the customer 3/5%.

On a large purchase (like a snow plow) CC costs can run $150/200 dollars nice savings for the customer if the dealer passes that savings along.


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## Plowtoy (Dec 15, 2001)

You know, other than day to day purchases, I will ask if there is any discounts for "cash" purchases. I think you would be surprised on how many business will give you a discount if you just ask. I got 10% off a medical bill earlier this year if I paid in full the same day. I planned on paying in full during the phone call anyway, so its a win win situation for both of us. The hospital didn't have to wait for their money, and I saved $100 bucks, granted that wasn't a cash deal (however it was a debit card) it really works out the same. I think giving a reasonable discount for an immediate cash payment is acceptable. It is still necessary to show that money on your books, depending on the client, they may or may not show it on theirs. payup


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## shovelracer (Sep 3, 2004)

I think the key is not so much paying cash, and no one was talking about tax fraud. The key is being paid immediately. So I would think it better to offer a discount for payment on the spot. Now being paid cash has no meaning if you need to wait or even worse make a special trip over to collect. The advantage to cash is instant resolution, even with a check or CC there is a delay. So perhaps your payment terms are net 10, 5% for payment within 48 hours, late fee on the other side for going +10. You will find the type to ask for discounts are also the type to drag out payment usually. Give me a discount and I'll pay net 30 is more normal on the bastards.


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## Mr.Markus (Jan 7, 2010)

I offer 7% for pre-payment on seasonals. Don't care how it's paid


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## YardMedic (Nov 29, 2006)

Thank you everyone for the different angles. I'm left wondering exactly what this customer intended, as I didn't get his project. It was certainly a bad taste left in my mouth from the last time a guy clearly wanted to pretend the transaction never happened in the eyes of uncle sam. The idea of cash paid right then as some guys have commented, does have some appeal. Interesting! Ok guys... thanks & stay safe


Kevin


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## lilweeds (Aug 3, 2007)

I've been know to barter a bit, and a small cash job here or there, but anything big sets up too many red flags! I have a friend that took a large deposit in beer.


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## YardMedic (Nov 29, 2006)

lilweeds;1494665 said:


> I've been know to barter a bit, and a small cash job here or there, but anything big sets up too many red flags! I have a friend that took a large deposit in beer.


Funny you say that. Another firefighter in my department needed a wall, so he paid me for materials & offered what he thought was fair for swaps to cover my time. I actually made out quite well because what it was worth to him was a bit more than what it was worth to me! I think he paid me 4 full 24-hr shifts... basically 2 weeks of shifts paid back as I needed them!


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## peteo1 (Jul 4, 2011)

So after you've spent an entire thread *****ing about ethics and what not, you're getting your local taxpayers to foot the bill for your services that aren't fire dept business? If I read that wrong apologies in advance.


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## PhilFromErie (Jun 29, 2009)

The formula for determining cash discounts depends on the specifics of your business, I think a accepted formula is between 1/3 and 1/2 of your tax bracket.

Example: your in the 20% bracket, you give between a 7-10% discount. 

Just kidding......kinda......no really, im just joking


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## YardMedic (Nov 29, 2006)

peteo1;1494822 said:


> So after you've spent an entire thread *****ing about ethics and what not, you're getting your local taxpayers to foot the bill for your services that aren't fire dept business? If I read that wrong apologies in advance.


Certainly not. Taxpayers got the paramedic coverage they paid for. The wall guy filled my place, and no tax dollars were lost or mishandled.


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## YardMedic (Nov 29, 2006)

peteo1;1494822 said:


> So after you've spent an entire thread *****ing about ethics and what not, you're getting your local taxpayers to foot the bill for your services that aren't fire dept business? If I read that wrong apologies in advance.


I know what it sounds like. It's like swapping shifts with any other job really. I work for you, you work for me.


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## kg26 (Feb 5, 2013)

These are the Terms 2/5/14 take 2% if paid with in 5 days otherwise the whole bill is due at the latest 14 days. I do resi comm is different I'm sure I don't use these but I'm sure these terms or a cash discount would be fine to help get customers to pay faster if Its an issue one is having. The other thing only give terms to old clients. New clients pay up front.


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## grandview (Oct 9, 2005)

kg26;1588464 said:


> These are the Terms 2/5/14 take 2% if paid with in 5 days otherwise the whole bill is due at the latest 14 days. I do resi comm is different I'm sure I don't use these but I'm sure these terms or a cash discount would be fine to help get customers to pay faster if Its an issue one is having. The other thing only give terms to old clients. New clients pay up front.


So with a 25.00 driveway they get a .50 discount.


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## SnowMT (Jan 12, 2011)

*True.*



Meezer;1490066 said:


> Just because someone gives cash discounts for payment doesn't automatically mean that they aren't paying taxes.
> 
> Offering cash discounts is a very common & legit business practice:
> 
> ...


I don't think they are trying to pull something by asking for a cash discounts. Companies, offer a cash discount of 1-3% if you pay your bill before the 5th or at the completion of the job. It helps companies with their cash flow. It still goes on the books, you just don't have to wait a 30- 45 day turn time on your monies.

ussmileyflag


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## Mr.Markus (Jan 7, 2010)

I offer a discount for prepay, or for seasonal contract. I have to say I don't offer one for method of payment. We have a 13% tax here in Ontario on services, "Paying Cash" is usually code for "I don't want to pay the tax." My answer is that I pay myself well, and my company needs money, it all goes through the books. Asking me to take cash and give you a 13% discount means that I now have to remit 13% on what I collected from you. Who gets screwed here to save the customer tax.


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## hatefulmechanic (Dec 27, 2012)

I price all of my business in anticipation of a customer paying with a credit card, and I figure it is a rewards card (anyone who does cards knows the tiering levels the companies will charge you), which typically equates to 2.8-3.5%. AmEx is higher. 

I use Square for all my processing anymore, which is a fixed 2.5% rate.

If a customer (snow, property management, sweeping, auto repair, truck beds, etc) wants to pay right then with cash, they get a receipt and 5% off the top. I am getting paid right then, I do not have to worry about my bank putting a hold on the check for a few days to verify its funds, nor do I have to worry about potential returned checks, processing fees, etc.

It does not cost me any money, I am not losing any profit, the customer is saving money, and I have my money right then.

Those charging extra for processing credit card transactions need to look closely at their merchant agreement, almost every processing company has stipulations in their user agreements, plus most states have a law, that prohibit charging more than a cash paying customer.

They do not, however, prohibit alternate payment discounts.


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## SnowMT (Jan 12, 2011)

Mr.Markus;1589010 said:


> I offer a discount for prepay, or for seasonal contract. I have to say I don't offer one for method of payment. We have a 13% tax here in Ontario on services, "Paying Cash" is usually code for "I don't want to pay the tax." My answer is that I pay myself well, and my company needs money, it all goes through the books. Asking me to take cash and give you a 13% discount means that I now have to remit 13% on what I collected from you. Who gets screwed here to save the customer tax.


Was thinking it comes off the amount you charge for the service, they would still have to pay taxes, even if they paid with cash, there still would be a paper trail, becuase it goes on the books.

This viebiage was on a hospital bill, If you pay the balance in full within 30 days, you may take a 10% prompt pay discount. If you are unable to pay your balance in full, you must contact me to set up payment plan.

People generally see what they look for and hear what they listen for. Harper Lee


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## kg26 (Feb 5, 2013)

Well naturally it more handsome to homes where your margin is greater. It's best used at the operators discretion.


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## JimMarshall (Jan 25, 2013)

Paul D;1489910 said:


> I'd tell them if the hire someone that is accepting cash and giving a discount i.e not reporting the income, they are likely hiring someone without insurance or that will cancel insurance after season has begun and they no longer need to show proof of insurance.
> 
> BTW, GV, No sales Tax in NH.


Insurance? We don't need no stinking insurance.


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