Buyback Allowance (Contracts) - Explained
What is a Buyback Allowance?
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Table of ContentsWhat is a Buy-back Allowance (Contracts)?How are allowances regulated in Futures Contracts?What is a Preferred payment method discount?What is a Partial Payment Discount?What is a Sliding scale discount?What is Forward dating?What is a Seasonal discount?
What is a Buy-back Allowance (Contracts)?
A buy-back allowance is a clause in a sales contract stating that a vendor may repurchase a the goods sold upon specified conditions. This means that the seller agrees to offer a sum of money (an allowance) to the buyer in a situation where the seller desires to repurchase the good or if the seller wishes to return the good.
How are allowances regulated in Futures Contracts?
The Commodity Futures Trading Commission (CFTC) in the United States alongside other commodity exchanges regulate and define the allowances and deviations admissible in future contracts. They give clear specifications on the acceptable deviations.
What is a Preferred payment method discount?
Vendors for retailers often give their customers who are paying with cash discounts, this saves the retailer the fees he will pay on credit card transactions if the client does not pay in cash. Therefore, offering a discount to customers enhance paying with case and saves retailers from credit card charges. Both retailers and customers benefit from the preferred payment method discount.
What is a Partial Payment Discount?
Traders or retailers who desire to enhance a better flow of cash use the partial payment discount. In most cases, there is a desire to improve cash flow but the buyer is unable to meet the desired discount deadline, the partial payment discount can be activated. This partial payment discount will cover the payment the buyer makes.
What is a Sliding scale discount?
A sliding scale is a discount that a retailer offers to a customer based on the customer's ability to pay. Not-for profit companies use the sliding scale discount more often than the for-profit businesses and retailers.
What is Forward dating?
Forward dating entails that a retailer dates an invoice forward to enable a buyer pay for delivered goods after some time the goods have been delivered. The customer is given an additional time to pay for delivered goods way after they have been delivered. Even when the goods arrive, the purchaser still has extra time before payment is made for goods, the forward date is contained in the invoice. For example , a customer who makes purchase of goods towards the end of November to sell them during December can have up to January before he makes payment for the goods.
What is a Seasonal discount?
Seasonal discount refers to slash in the price of goods or reductions in the price of goods given to customers who make out-of-season purchase. For instance, a customer that makes a purchase in a slack period, a period with little work or activity can get a discount. For example, purchasing products when demand for them is low can attract seasonal discount. Seasonal discount serves as an incentive for customers, this encourages them to make purchase of specific products in off-season or when they are out-of-season.