Page 7 Chapter 2

CHAPTER 2
Selling Goods and Services

You should also note some of the terms you may find on an invoice:

 We have already looked at E&OE which means errors and omissions excepted.
 30 days net means that payment in full should be made within 30 days. (Other
periods are possible such as 7 days or 60 days).
 COD stands for Cash on Delivery. Payment must be made when the goods are
delivered.
 Ex‐works means that the price of the goods does not include delivery whereas
carriage paid means that the price does include delivery.
 Prompt Payment Discount may be offered for early payment. This is usually a
further percentage discount if the invoice is paid (for example) within 7 days.
(Prompt Payment discounts are also known as Settlement Discounts or cash
discounts).

Invoice books are generally in multiple parts. There will be a copy to send to the customer
and a copy to keep for your own records. More copies can be kept if the invoice is required
by more than one department.

Discounts

Discounts are offered as a way of increasing sales. There are different categories of
discount.

Discounts to the general public are usually shown as a ‘sale price’. The reason for offering a
discount could be to encourage people to buy slow moving stock, or stock which is soon to
become out‐of‐date or obsolete. Alternatively it may be to get us into the shop where we
can be encouraged to buy other things at full price. The discounted item is then known as a
‘loss leader’ where little or no profit will be made on that item (or in some cases even a loss)
in the hope that customers will buy other goods where the profit will be made.

Discounts may be offered for bulk buying. This is very
common. I’m sure we have all seen offers like ‘buy one get
one free’. Everyone knows that if we buy one orange from
the supermarket it will often cost more per orange than if we
buy (say) a dozen. In business this bulk discount may be
offered as a percentage. For example a supplier may offer a
10% discount if the customer buys more than 100 units or
spends more than £500. Many things offered in bulk are
offered at a discount because there are fewer costs involved, whether this be distribution
cost, selling costs or just basic administration costs.

Another type of discount is the trade discount. Many DIY stores offer trade discounts to
business customers ‘in the trade’. This is a way of encouraging people who are likely to be
repeat customers to buy from this store rather than going elsewhere. Offer your customer a

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